Nortel looking to sell stake in joint venture

Nortel this week confirmed that it is looking for a buyer for its majority stake in a joint venture with LG Electronics.

Nortel has been under pressure to restructure after filing for Chapter 11 bankruptcy protection earlier this year. It owns 50% plus one share of the joint venture with LG, called LG-Nortel, which is based in Korea and primarily serves the Korean telecom market.

Nortel says that the joint venture is a profitable business that has built a strong balance sheet since its start in November 2005. It has not filed for bankruptcy protection. Nortel emphasized the management operating margins of the joint venture have been around 26%.

Nortel said in a statement that the decision is "the best path forward for LG-Nortel, its customers and employees" and that it will "allow LG-Nortel to embark on the next phase of its journey and realize its full potential."

As I noted recently, rumors have been swirling for some time about who is buying what part of Nortel. The company hasn't had the easiest time finding a buyer - or a price - that it is happy with. It put its Metro Ethernet Networks division up for sale way back in September, but failed to secure a deal. It filed for bankruptcy in January.

The next step is for Nortel to file a motion with the Ontario Superior Court of Justice to approve the process for the sale. LG and the Ontario court will both have to give their consent for any sale to move forward.

Jeff Caruso is site editor at Network World.