law1985

How Worrisome is Nortel's Exploration of Bankruptcy Protection?

Management and the BOD are acting responsibly by investigating every alternative. The status quo has been rejected and the reasonable alternative is restructuring with creditor protection as the fall back position, if they are unable to realize significant value from asset sales. The worst case scenario is already built into the share price.

I am not sure that a potential interested acquiring party can afford to wait to buy assets from a forced liquidation. For instance, the US infrastructure spending stimulus, which includes broadband, will be implemented in 2009 and 2010, in order to participate a supplier needs to be ready yesterday.

I am not a fan of Mike Z....but he is a competent financial engineer. He needs to do what IBM did in the early 90s despite screaming employees, demanding pensioners and furious shareholders. Notice how quiet the debt holders are...

Management is also providing a lot of information. Preannouncements and financial details are forthcoming in a timely fashion. Furthermore, there is nothing wrong with press releases.