The Fight for Nortel

The restructuring of Nortel (NRTLQ.PK) seemed so easy: Spend a few months trying to figure out if a new Nortel could happen before ultimately deciding to toss in all of its strategic chips by deciding to sell everything.

But just when the destruction of Nortel was nearly a fait accompli, MatlinPatterson could throw a wrench in the works by putting together a deal to acquire Nortel.

So what you’ve got are two diametrically opposite approaches: Nortel’s management and board wants to sell everything at the highest possible price, while Matlin Patterson apparently wants to keep Nortel intact.

From the outside looking in, Matlin Patterson looks like a white knight, especially compared to the dark knights now running Nortel. But keep in mind, Matlin Patterson’s bread and butter is acquiring distressed companies, and then maximizing value for its investors.

So don’t expect Matlin Patterson to take over Nortel, and then play the nice guy. It’s in the business of making a lot of money - and Nortel could have huge ROI potential.

Without any knowledge about Matlin Patterson’s plans for Nortel, you have to believe it sees a lot of value in Nortel. Rather than Nortel selling everything, Matlin Patterson may believe a better approach is keeping Nortel together, and then de-leveraging itself by selling non-core assets.

This seems like a better and more pragmatic approach than the senseless destruction of a once-great company that is suffering from bad strategic decisions and a lack of long-term vision.

More: If you take a look at Matlin Patterson’s Web site, there’s little information about the company and its investment approach. It was founded by investors David Matlin and Mark Patterson, former distressed debt specialists at Credit Suisse Group.

Comments

[1_who_knows:]

What reason is there not to think that Matlin Patterson's strategy will be to tease present creditors with the promise of better returns than a break-up, only to break the company up if - by no other means - than gutting Canadian and US employment and re-branding Chinese equipment, selling or licensing IP, etc.?

It is not far-fetched to discern that M-P's strategy is to 'better monetize key Nortel assets', to its own profit, than it is to actually operate Nortel with consideration of, oh, say, employees. The corporate-speak memo can already be heard, if one listens closely, profusely apologizing for the painful, but necessary steps of terminating the majority of employees, while M-P hauls off the cash made from de-contenting Nortel and turning the name into a logo brand like "RCA".

Better ROI.

Jul 10 09:15 AM