Nortel wins bankruptcy extension; AGM delayed

Tue Feb 10, 2009 4:38pm EST
 
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TORONTO (Reuters) - Nortel Networks Corp on Tuesday said a Canadian court agreed to a three-month extension to its bankruptcy protection proceedings and gave the company permission to delay its annual shareholder meeting.

Nortel, North America's biggest maker of telephone equipment, said the Ontario Superior Court of Justice has granted an extension to the stay of proceedings until May 1, as the company had sought.

"The purpose of the stay of proceedings is to provide Nortel with an opportunity to develop a comprehensive business and financial restructuring plan for consideration by (its) creditors and the Canadian court," the company said in a statement.

The court also allowed the company to delay its annual shareholder meeting -- which Nortel has said would be costly and a "distraction" -- past a statutory deadline of June 30.

Nortel now can hold the meeting within six months after the termination of the stay period, it said.

Ernst & Young, the monitor overseeing Nortel's bankruptcy protection filing, revealed in a recent report that the company is preparing to cut more jobs, as well as other costs, as it restructures under court shelter from creditors.

The Toronto-based telecom equipment maker filed for bankruptcy protection in Canada and the United States last month, blaming the economic crisis for derailing a turnaround effort that began in 2005.

It had about $2.4 billion in cash when it sought court shelter from its creditors and about $4.5 billion in long-term debt, according to court documents.

Nortel shares closed unchanged at 11 Canadian cents on the Toronto Stock Exchange. In mid-2000, they were worth more than C$1,100 each, adjusted for a stock consolidation that took place in 2006.

($1=$1.25 Canadian)

(Reporting by Wojtek Dabrowski; Editing by Frank McGurty)