MuniWireless

Nortel, the Canadian telecom equipment vendor, has filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code. Nortel’s shares had been trading under $1 on the NY Stock Exchange for several weeks. The NYSE threatened to delist it. Worse, it’s facing over $100 million in interest payments to bond holders this week. Telecom equipment manufacturers have suffered dramatic declines in sales this year after customers put off their purchases. It still has $2.6 billion in cash, but its long-term debt is around $4.5 billion.

Nortel has been a weak player in the telecoms equipment market for sometime now. It went into the WiMAX eqiupment market but the companies deployment WiMAX networks, Sprint and Clearwire, did not buy Nortel equipment. Over the years, it made expensive acquisitions and paid out a lot of money to settle a class action lawsuit in an accounting scandal. The financial crisis just put it over the edge.

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