Gores enters Nortel fray

The Gores Group joint venture with Siemens has stepped into a raucous bankruptcy fight for business units of bankrupt Nortel, for which a company backed by TPG and Silver Lake has already bid.

A joint venture between German company Siemens and Gores Group “expects” to submit a competing bid for a unit of bankrupt Nortel Networks against TPG- and Silver Lake-owned Avaya.

Nortel’s enterprise solutions business, which makes telecom networks for companies, has been up for sale as part of Canada-based Nortel’s reorganisation process. Avaya has already made a $475 million bid for the business unit.

The joint venture, called Enterprise Networks Holdings, said in bankruptcy court documents that it is a “potential bidder”, for the business unit, and “is expending considerable resources, time and substantial expense, in the expectation of making a competing bid”. 

Siemens’ and Gores’ JV recently objected to the sales process for the enterprise solutions business, arguing the process gives Avaya an unfair advantage.

The joint venture, forged last summer, is funded with a total of €350 million from Siemens and Gores, with Gores taking a 51 percent stake and Siemens holding 49 percent of the partnership. 

Distressed specialist MatlinPatterson also argued the sales process for the enterprise solutions business is unfair to creditors and a sale to Avaya could result in anti-trust or other regulatory issues. MatlinPatterson recently bid $725 million for Nortel’s wireless business, but was beat by a $1.13 billion bid from wireless giant Ericsson.

It is unclear if MatlinPatterson’s objection to the sales process for the enterprise solutions business means the firm intends to bid for that unit as well.

Nortel, once North America’s largest telephone equipment maker, fell into bankruptcy in January amid increased pressure from competitors and the global financial meltdown.