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Mobile IoT: News Item

$725 Million to Acquire Nortel's Assets

Sends Open Letter to All Nortel Stakeholders

MPAM Wireless., an affiliate of MatlinPatterson, submitted to Nortel and its creditor constituencies a proposal to acquire substantially all of Nortel's CDMA and LTE Access assets for US$725 million. MatlinPatterson believes that its alternative proposal is higher and better than the "stalking horse" bid from Nokia Siemens Networks B.V. ("NSN") and provides, on multiple fronts, a superior outcome for Nortel and all of its stakeholders.

MatlinPatterson has been closely following the Nortel bankruptcy and has engaged a highly experienced set of advisors, including a team of industry experts led by former Nortel executives Dion Joannou, Richard Piasentin and Tony Pirih, to assist in evaluating transaction alternatives. Following Nortel's announcement of NSN's selection as a "stalking horse" to acquire the CDMA and LTE Access assets, MatlinPatterson recognized it would have to expedite its strategy to form a "New Nortel" in order to maximize value for all stakeholders. Through an exhaustive due diligence process led by its team of advisors, which also includes former executives of AT&T Wireless, Alltel and Motorola, MatlinPatterson determined that these assets can form the basis of a stand-alone enterprise with long-term viability that will meet the needs of all stakeholders. This independently held business would provide a range of opportunities -- from additional bolt-on acquisitions to partnerships to reinvention and new ideas from within the technology asset base.

MatlinPatterson today issued the following open letter to Nortel's employees, customers, suppliers and other stakeholders in connection with its effort to maximize value to the estate by forming a new enterprise around the selected CDMA and LTE Access assets:

Fellow Nortel Stakeholders:

Nortel is a unique company with a rich heritage, talented employees, an enviable customer base and innovative technologies. MatlinPatterson recognizes the value inherent in Nortel and believes that its proposal is the best way to maximize this value.

MatlinPatterson is confident that the CDMA and LTE Access assets can emerge from bankruptcy as a reinvigorated, independent company. We have significant experience investing in this industry, and we have spent considerable time over the last several months evaluating Nortel's businesses. As such, and because MatlinPatterson has been an investor in Nortel for some time now, we are unwilling to accept and will actively take steps to prevent a 'fire sale' of Nortel's core assets followed by the wholesale liquidation of the remaining businesses.

Having worked expeditiously during the short timeframe provided by the U.S. Bankruptcy Court, MatlinPatterson and its dedicated team of advisors, through MPAM Wireless, Inc., have today put forward an alternative proposal that we believe represents a significant step towards forming a reorganized, viable and strong New Nortel.

MPAM Wireless's alternative proposal is substantially similar to the NSN proposal, but it is notably different in that it offers $75 million more than NSN's bid for the selected CDMA and LTE Access assets, it provides existing creditors with the opportunity to participate side-by-side with MPAM Wireless in its investment, and it creates potentially value-enhancing alternatives for additional Nortel assets other than liquidation. MPAM Wireless's proposal also creates opportunities to form strategic partnerships with industry leaders to further leverage the Nortel assets, including the development of the LTE Access assets. We welcome the opportunity to develop these alliances.

MatlinPatterson, through its affiliate, has submitted an alternative proposal because we believe that Nortel's assets, its technologies and its people are outstanding. Nortel's CDMA business remains highly valuable and will continue to generate strong cash flow for many years to come. MatlinPatterson has a long-term investment outlook, and if we are successful in acquiring the CDMA and LTE Access assets, we will commit to achieving their full potential: we will look to partner with the existing Nortel management team and we will pursue opportunities to acquire additional Nortel assets as they become available during the Nortel Chapter 11 cases. We believe that Nortel's assets, under the right stewardship, can form the core of a reorganized Nortel with a bright future as a well-capitalized, stand-alone entity.

We are confident that our proposal provides the best outcome for all of Nortel's stakeholders, as detailed below:

Benefits of MatlinPatterson's Proposal

For All Stakeholders

  • Creates a strong, independent entity that is financially stable and well-positioned for long-term viability, growth and success.
  • Alleviates much of the uncertainty that has surrounded the company over the last several months.
  • Creates opportunities to explore value-enhancing alternatives with numerous potential strategic partners.
  • Facilitates international opportunities. Although the CDMA international assets are excluded from this transaction, MatlinPatterson recognizes the value of existing relationships and opportunities available with Nortel's international stakeholders and together with management will seek to re-develop long-term relationships.
  • Allows a highly-experienced investor with a long-term investment outlook and a track-record of working successfully with existing management teams to begin working to restore Nortel to a preeminent position in the technology and telecommunications industries.

For Employees

  • Preserves as many, if not more, jobs as the NSN proposal with the potential to save many thousand more Nortel jobs.
  • Enables the Nortel assets to be part of an independent company with financial strength, substantially reduced debt and the support of a committed long-term equity sponsor.
  • Provides the opportunity for current Nortel employees to continue working for a strong, independent Nortel, rather than working for a relatively small subsidiary of a corporate conglomerate.
  • Affords Nortel's strong management team, talented engineers and committed employees with the opportunity to work together with a focused and committed financial partner that has sufficient capital and the long-term investment outlook needed to create a highly-competitive and profitable company.

For Customers and Suppliers

  • Provides a smooth transition and continuity of normal commercial relations.
  • Allows Nortel to remain a viable business partner so that Nortel's existing business relationships can continue without disruption.
  • Ensures that the company has the financial flexibility to support its legacy footprint while continuing to invest in a world-class roadmap for the evolution of installed technologies.
  • Positions MatlinPatterson to acquire additional Nortel assets to meet the global needs of the existing customer base.
  • Enables the continuation of existing business relationships for many years to come through MatlinPatterson's long-term commitment to the Nortel assets.
  • Provides customers the opportunity to enter into long-term supply commitments and to receive certain technology assurances.
  • Allows key customers to participate in shaping the strategy for these assets through the advisory board that MatlinPatterson intends to establish.

MatlinPatterson appreciates the support that it has received from other Nortel creditors as well as the company's employees, customers, suppliers and other stakeholders. We look forward to successfully completing this process, to creating a brighter future for Nortel, and to working with Nortel's talented employees and customers around the world for many years to come.

BMO Capital Markets and Broadpoint.Gleacher Securities Group are serving as financial advisors to MatlinPatterson and Blake, Cassels & Graydon LLP and Bracewell & Giuliani LLP are serving as legal advisors

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