Thursday, September 2, 2010

Canadian Webinar 9-1-10 Part 1 summary.

The Koskie Minksy/ NRPC webinar on Sept 1st covered a number of items including: (1) The status of Nortel assets; (2) The Health and Welfare Trust Allocation process; (3) Health and Life Insurance Benefits; (4) Terminated Group update; (5) Defined Benefit Pension Plan; (6) Political activity; (7) Compensation Claims Process; and (8) Q&A.

Over the next few days I will try to summarize what I thought were the main points in these areas.

(1) Nortel Assets:

A total of $3.03B US held in a lock box with another $223M in various escrow accounts. Also a sum of $214M held in a single purpose NNL bank account exclusively belonging to the Canadian estate.

There are still unsold assets including; intellectual property; real estate; tier 2 sales; minority interests; and venture capital investments.

Most of the assets have to be allocated among a number of jurisdictions including Canada, US, EMEA, and CALA. No allocation method has as yet been determined. Discussions have been held but so far have been unsuccessful. A major issue is the ownership of intellectual property. Also the UK pension regulator is pressing for a very large claim against the Canadian estate.

Until the asset allocation is fully worked out, the full distribution of assets against claims cannot be completed. There is however the possibility of an interim distribution but there is no clear information on that.

(2) Health and Welfare Trust

The monitor has prepared a proposal for the allocation of the HWT assets and submitted it to the court to be reviewed on Sept 29 2010. The parties are working to achieve a distribution by Dec 31 2010. The Canadian Revenue Agency has been requested to make an advance tax ruling seeking tax relief on the HWT distributions. Individuals receiving monthly income benefits (SIB and STB) will receive a value of their entitlement sometime this month.

The HWT has liabilities estimated to be $532M and there is only $80M in assets. The monitor has recommended that the benefits are shared pro rata by those with: Pensioner Life ; LTD Income; LTD Life; LTD Optional Benefit; and SIB and STB income. Koskie Minsky stated that this would result in approximately 34% recovery on the liabilities of the beneficiaries. I am not sure how they arrived at that percentage.

I will follow up tomorrow with a summary of the update on benefits and the terminated group.

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