Nortel Networks, the Canadian equipment maker that filed for bankruptcy protection in January, has confirmed speculation it is aiming to sell off its majority stake (50 percent + 1 share) in its South Korean joint venture with LG Electronics. “LG-Nortel is a profitable, standalone business with a strong balance sheet, and has not filed for creditor protection,” Nortel stressed in a statement. It talked up the venture’s success, claiming the business achieved a management operating margin of US$341 million, or 27 percent, in 2008, and 26 percent in the first quarter of 2009. Goldman Sachs has been hired to find a buyer. Previous reports valued the joint-venture at close to US$1 billion.
Although Nortel earlier this year said it hoped to emerge from bankruptcy protection before mid-year as “a leaner and more competitive company,” under bankruptcy law Nortel must seek the most value for its creditors, which could mean breaking the company apart if suitable buyers are found. Nokia Siemens Networks and Avaya have been linked to potential purchases of its mobile and enterprise assets, respectively. Yesterday’s announcement from Nortel included a comment from Mike Zafirovski, president and CEO, noting that the vendor is working “to evaluate the ultimate path forward for all of our businesses.”