Nortel asks U.S. and Canadian courts to approve employee retention plan

The Canadian Press ~ The News
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TORONTO - Nortel Networks Corp. is asking both U.S. and Canadian courts to approve a new US$92-million employee retention plan designed to keep some key staff from quitting their jobs as various business units are sold off.
The former star Canadian telecom equipment vendor said Thursday that buyers for its various business divisions have made it clear they want Nortel to hang onto certain employees to ensure a smooth transition.
Nortel also announced it was "exploring strategic alternatives to maximize the value of the company's intellectual property."
The company retained ownership of its key LTE patents under the US$1.13-billion sale of its wireless division to Swedish telecom Ericsson.
Ottawa-based Mosaid Technologies (TSX:MSD) has expressed an interest in acquiring the sought-after LTE patents for advance wireless networks and mobile phones as well as some of the company's lesser-known patents.
The jobs covered by the retention plan range from the company's finance department to supply chain management, research and development, and human resources, Nortel said in a statement.
A representative for Nortel confirmed that the Toronto-headquartered company will foot about US$11 million of the retention plan bill, representing about 12 per cent of the overall cost.
The remaining 88 per cent would be funded by the companies that buy Nortel's businesses, a stipulation made in the sales agreements.
That makes the plan worth about US$91.7 million overall, with the buyers paying about US$80.7 million of that.
Nortel - which has been publicly criticized by former employees and pensioners for its handling of their severance and benefits - said its latest employee retention plan was created with the help of independent advisers who factored in the possibility that more stable and competitive jobs could lure staff away.
"The employees being offered participation in the plan were instrumental in the work completed to date and are critical to fulfilling the remaining tasks," said Nortel chairman David Richardson in a release.
"The loss of these key employees at this time would create significant delays in our activities and place the achievement of our objectives at risk. In short, we believe the plan is in the best interests of our creditors and other stakeholders, and of the process itself."
Nortel says it has received net proceeds of US$2 billion from the completed sales of its assets, while another $1 billion is expected once several previously announced sales are completed.
The company has already sold several of its biggest business units to a variety of buyers in a series of competitive auctions and is working to complete sales of other units or assets.
Nortel has been operating under court protection from creditors since January 2009.
Last March, Nortel received court approval to include eight senior executives in a US$45 million incentive program that would reward them for achieving certain goals.
The program was split into two parts, with about $22 million set aside to keep about 900 key engineers and other professionals with the company. The other $23 million, provided goals-oriented incentives for 84 people, including the eight members of the senior management team.

Organizations: Nortel Networks, Mosaid Technologies, TSX

Geographic location: U.S., TORONTO, Ottawa

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