Monday, January 12, 2009

Nortel Bondholders Biting Their Nails

As we reported on January 9, the likelihood of a Nortel bankrtupcy filing this coming Wednesday (coupon payment date) is high to quite high. Recent rumors from the underground community had suggested that Huawei was licking its chops at NT's metropolitan ethernet business and would pay up to $1 billion. However, based on reports from forbes and debtwire from earlier today, the deal is dead in the water. Ooops. Well, maybe some other suitors are left in the wings, although Lazard (which one should not forget is nicely tempted by the prospect of a $150,000 monthly retainer, and numerous diligence trips to Toronto as soon as the company hits "File") will likely press hard the issue that DIPs will likely be impossible to come by anywhere between now and when the new version of the G.W. bridge is built so Nortel should file sooner rather than later... NT bonds have run up a good 40-50% in the past few weeks on both the rumors and the phenomenal HY sucker rally in the last weeks of 2008, so portfolio managers are sweating whether or not to bail.

Either way, it is T minus 28 hours to funds flow so sit back, grab some popcorn and enjoy the show. Sphere: Related Content
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