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Canada Government Intervention On Nortel/Ericsson Pact Undecided

By Stuart Weinberg, OF DOW JONES NEWSWIRES

TORONTO -(Dow Jones)- Canadian Industry Minister Tony Clement said he hasn't decided whether to intervene in the planned sale of Nortel Networks Corp.'s ( NRTLQ) wireless business to L.M. Ericsson Telephone Co. (ERIC).

"I'm not ruling out intervening and I'm not ruling out not intervening," Clement said Monday in Quebec, according to a transcript of the comments. "Right now, in order to be nonprejudicial or non-prejudged of the issue, I have to keep my options open obviously and make sure that all the facts are before me and the government. That's basically where we are."

Research In Motion Ltd. (RIMM), maker of the BlackBerry smartphone, has asked the government to intervene, saying in a statement Sunday that "the government has the authority and responsibility to get involved to protect vital Canadian interests."

The Investment Canada Act gives the government the power to block a foreign investment on the basis of national security. Last year, the Canadian government blocked the $1.3 billion sale of MacDonald Dettwiler & Associates Ltd.'s (MDA.T) space business to U.S. rival Alliant Techsystems Inc. (ATK).

RIM, of Waterloo, Ont., didn't participate in the auction, alleging that Nortel effectively blocked its bid by preventing RIM from bidding on additional Nortel assets for one year.

Nortel, which filed for bankruptcy in January, denied the allegation, saying RIM declined to sign a standard non-disclosure agreement, thereby disqualifying itself from participating in the auction. RIM had indicated it was prepared to bid $1.1 billion for Nortel's CDMA (code division multiple access) and LTE (long term evolution) assets and certain other Nortel assets.

Ericsson, the Swedish telecom-equipment maker, won Friday's auction with a $ 1.13 billion bid. It beat out rival Nokia Siemens and private-equity fund MatlinPatterson III LLP. If the Ericsson transaction doesn't close, Nokia's$ 1.03 billion offer would be chosen as the alternate bid, according to court documents.

A hearing to approve the transaction is scheduled for Tuesday in the U.S. Bankruptcy Court for the District of Delaware. There has been speculation that RIM will attempt to argue in court Tuesday that it was unfairly shut out of the bidding process. Any supplemental objections to the successful bid had to have been filed and served by no later than 4 p.m. EDT Monday, according to court documents.

Officials from RIM weren't immediately available for comment.

-Stuart Weinberg, Dow Jones Newswires; 416-306-2026; stuart.weinberg@dowjones.com

  (END) Dow Jones Newswires
  07-27-091616ET
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