Nortel files for bankruptcy

Global Credit Crunch, Company's Declining Sales Led To The Decision

  Nortel Networks Corp, North America's biggest maker of telephone equipment, filed for bankruptcy protection in the US, a victim of the global credit crunch and declining sales.
    Nortel, based in Toronto, had over $1 billion in assets and debt, according to a Chapter 11 filing of its US subsidiary on Wednesday in Wilmington, Delaware. Fourteen affiliates of Nortel's financing unit are seeking similar protection in Delaware. Five units filed for bankruptcy there under Chapter 15. Nortel said Canadian affiliates also will seek protection. "It's the end of a saga,'' said Benoit Lalonde, V-P of fixed income at Laurentian Bank Securities, a unit of Canada's seventh-largest bank. Laurentian doesn't own Nortel debt. "Nortel is a corpse awaiting burial. I'm sad to see it happen but the tears were shed many months ago.''
    Nortel has lost almost $7 billion since CEO Mike Zafirovski took over in 2005, leaving him struggling for funds to operate the company. Bank of New York Mellon Corp was listed as its largest unsecured creditor in its role as trustee on over $3.8 billion in notes. Export Development Canada is owed $186.7 million and will provide as much as $30 million in reorganization financing for 30 days. "If they're going to go, it's better to go now,'' said Richard Windsor, a global technology specialist at Nomura International in London. "It would imply the company is unable to stabilise the cash flow situation.'' BLOOMBERG
    DB quarterly loss at € 4.8 bn
Frankfurt: Deutsche Bank has racked up a loss of about € 4.8 billion ($6.38 billion) in the final three months of 2008 alone, the bank said in a surprise profit warning on Wednesday that sent its shares tumbling.
    The bank blamed troubled markets which ruined earnings at its sales and trading business, formerly the engine room of the one-time investment banking powerhouse.
    In addition, it racked up losses trying to hive off risky exposure which Deutsche said now put it on track for a net loss of roughly € 3.9 billion for last year.
    The bank, originally seen as little affected by the crisis but which has been dragged ever deeper into the markets storm, said it planned a dividend of 50 cents per share for 2008.
    Its Tier 1 ratio—an important measure of a bank's financial health—will be in the region of the targeted 10 percent at the end of 2008, the bank said. REUTERS