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Nortel Networks to pay U.S. bondholders up to $1 billion in interest

25
Jul
2014

By Tom Hals WILMINGTON Del. (Reuters) – Nortel Networks Inc, the U.S. unit of defunct Canadian telecom company Nortel Networks Corp, has agreed to pay up to about $1 billion in interest that has accrued on the $3.9 billion it owes to its U.S. bondholders, a court filing showed.     Thursday’s settlement comes as Nortel’s bankrupt units in Canada and Europe are fighting with the U.S. unit over how to divide $7.3 billion raised by liquidating the global telecommunications company.     The settlement, if approved by U.S. Bankruptcy Court Judge Kevin Gross in Wilmington, Delaware, could affect Nortel retirees in Canada and the United Kingdom. They argued that the bondholders should get $90 million in interest, or no interest at all.     Any funds that are left over in Nortel’s U.S. bankruptcy after paying off the bondholders and other U.S. creditors could be used to help to make up for pension shortfalls in Canada and the United Kingdom.     Under the proposed settlement, bondholders would be entitled to post-petition interest of $876 million, potentially increasing to as much as $1.01 billion if Nortel has not repaid them by June 30 next year.     Nortel said the settlement will help speed the resolution of its bankruptcy.

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