Impact of NNI claim against NNL on cash settlements

The US$2.063 billion pre filing claim in favour of Nortel Networks Inc. (NNI=Nortel US Estate) is 53% of the current estimated Nortel businesses' sale proceeds of US$3.9billion. Plus, the US Estate had already hoarded a large percentage of the Nortel Global Estate's cash from operations, with a U.S. Estate gross cash balance at October 3, 2009 of $829 million out of a total Nortel Global Estate cash balance from operations of US$2.864 billion.

Diane Urquhart, an Independedent Financial Analyst who is very familiar with the Nortel situation and has been heavily involved helping retirees, LTD employees, and other ex-Nortel people, predicts the cash settlement ratio for the Nortel US Estate will be a multiple of more than two times higher than the Canada Estate, now that we have seen this December 23rd pre filing claim in favour of NNI.

Her current estimates would be cash settlement ratios of about 20 to 25 cents per dollar of claim in the Canada Estate, 60 cents per dollar of claim in the US Estate, 50 cents in the UK Estate, with an average cash settlement ratio in the Nortel Global Estate at about 50 cents per dollar of claim.

This action by the IRS and NNI has dealt another blow to the Canadian pensioners who stand to lose even more as their claim against Nortel (for unfunded pension trust funds) will yield a much smaller cash settlement. For the lucky bond holders and creditors in the USA and the UK, they may see a return of up to 60% and 50% respectively, on their claims. Somehow the priorities seem to be completely wrong. Pensioners in the UK and USA have protection through their government pension insurance programs. Pensioners in Canada are left out in the cold to sink or swim without any government assistance. You would think that Canada would be in there fighting for the rights of their citizens, but not a peep. What a bunch! Canadians need to take note and eviserate this pack of chickens in the next election.