Tuesday, February 23, 2010

Webinar with the NRPC and Koskie Minsky

The webinar held on Feb 23 2010 provided some detailed information about the Settlement Agreement between the NRPC and Nortel which will be examined by the Canadian court on March 3.

Much of the Webinar detail has been covered in my posts or on the NRPC web site or in the 39th Monitor report on the Epiq website and on Koskie Minsky's web site. There are also FAQs on the Koskie Minsky site.

I picked up a few items which were new to me and which I will share here.

Per Koskie Minsky, Nortel will cease to exist this year. There will be a skeleton crew of about 475 people continuing into 2011 providing central HQ services and transition services for the purchasers of the parts of Nortel. All benefits as we know them will cease being handled and paid for by Nortel during the year.

If the settlement had not been proposed, and does not get approval from the court the pension fund and all other benefits will likely end on March 31st 2010.

Out of the CFA agreement for $190.8M to be paid by NNI to NNL, the agreement provides $57m to ensure the pension continues until Sept 30th 2010, and that LTD and medical benefits continue in Canada until Dec 31st 2010. There is no mention of what will happen in the USA regarding health benefits.

If the settlement is agreed to by the Canadian court I am hoping that it will influence what happens to health benefits in the US and extend them to December also. At this point there is no information on the US health benefits from Nortel or the court or anyone else.

The settlement means that people on disability will be paid out of the $57M settlement agreement and so the Health and Welfare trust fund will not be depleted further this year by their payments. Some other benefits such as Life Insurance will come out of the HWT however.

Assuming the settlement is approved, pensions will be paid at 100% until Sept 30,2010. After that a private administrator will be appointed and will immediately reduce the ongoing pension payments by the trust fund deficit ratio. KM and the representative from Segal stated that that is approx 30% but there will be an evaluation carried out on wind up to determine the exact percentage reduction. After purchase of annuities they also expect that the pensions will continue on at the reduced percentage or about 70% of what we are getting normally.

The difference in pension will become a claim against the Nortel estate and at some point we might actually see that augment our pensions.

KM stated that there is some opposition to the settlement agreement by the bond holders in Canada and the creditor's committee in the USA. They will express that opposition at the court hearing on March 3rd and it will be up to the judge to decide if the agreement should proceed.

AS part of the settlement, terminated employees can look for a payment of $3000 as an advance on their severance claim. It is not expected to have that worked out until the summer.

The webinar pus the slides will be available on the NRPC web site. I hope they also provide the questions and answers to them on the site as well.

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