August 7, 2009 / 2:34 PM / 8 years ago

Government repeatedly refused to help Nortel: executive

TORONTO (Reuters) - The Canadian government repeatedly refused to help Nortel Networks over the past year as the telecom equipment maker fought to avoid filing for bankruptcy protection, a senior Nortel executive told a parliamentary committee on Friday.

"At the end of the day, the government chose not to provide any pre-filing support," Nortel Chief Strategy Officer George Riedel told the House of Commons industry committee.

Riedel said Nortel had about a dozen different meetings with the federal government over the last year to ask for funding help for its various restructuring plans.

"The feedback we got was that the government did not see the plans presented as viable, that the industry was not at risk," he said.

Nortel collapsed into bankruptcy protection in January. It blamed the economic downturn for derailing its turnaround efforts.

Nortel representatives were appearing before the committee to answer legislators' questions about Nortel's planned sale of wireless assets to Sweden's Ericsson for $1.13 billion.

Canadian BlackBerry maker Research In Motion has opposed the deal. It covets Nortel's next-generation LTE -- or "long-term evolution" -- wireless assets, which are being licensed as part of the Ericsson transaction. It has argued it was effectively prevented from bidding on them by Nortel.

It has also waved the Canadian flag, saying the sale of Nortel to a foreign company is not in the country's best interests.

"I believe that it is incumbent upon the government to examine it thoroughly with every resource at its disposal," RIM co-Chief Executive Mike Lazaridis told the committee on Friday.

He added that RIM had come very close to negotiating a deal with Nortel, but ultimately failed to reach an agreement. He said LTE is "by far the most widely supported architecture for the next generation of wireless networks" and many large carriers plan to use it.

"How our discussions with Nortel failed to produce a good outcome for RIM and for Canada is another sorry story in the debacle that is Nortel," Lazaridis said. "Suffice to say that Nortel failed to bargain in good faith and failed to honor promises made to RIM on many occasions."

ERICSSON SAYS NO LAYOFFS PLANNED

Ericsson Canada CEO Mark Henderson also appeared at the hearings, largely to reaffirm his company's commitment to Canada and answer questions about Ericsson's plans for the Nortel assets.

He said that the roughly 800 Canadian Nortel employees who work in the units being acquired by Ericsson will keep their jobs at substantially the same terms and in the same locations.

"We do not anticipate any layoffs or major changes in the day-to-day work of these employees," Henderson said.

Nortel appears set to sell its key businesses off to the highest bidders instead of restructuring under bankruptcy protection in hopes of emerging as a viable company.

Additional reporting by David Ljunggren in Ottawa; editing by Peter Galloway

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