Fedreal government pledges to help Nortel

Wed Jan 14, 2009 2:48pm EST
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By Randall Palmer

OTTAWA (Reuters) - The federal government pledged on Wednesday to help Nortel Networks Corp, North America's biggest telephone equipment maker and major source of Canadian R&D spending, as it seeks to emerge from bankruptcy protection.

"The government of Canada appreciates the importance of the telecommunications industry to our economy and will continue to work with Nortel during its restructuring through Export Development Canada (EDC)," Industry Minister Tony Clement said in a statement.

EDC, a government agency, has agreed to provide up to C$30 million ($24 million) in short-term financing through an existing bonding facility.

In addition, Clement said EDC is open to discussing financing for Nortel in conjunction with other financial institutions.

The Conservative government has traditionally opposed using public money to rescue ailing companies but announced C$4 billion in emergency loans to the auto industry last month and has said extraordinary times require extraordinary measures.

The government resisted characterizing its position on Nortel as a bailout, insisting that whatever EDC did was on a commercial basis.

"I don't see us in this particular instance picking a winner or loser," Clement told Reuters in an interview.

All the language was geared, however, to the idea making sure Nortel and the industry as a whole survived rather than died.   Continued...