Nortel Networks Corp. is set to provide an update on its relationship with Export Development Canada today as it faces a deadline to ensure it has continued financial support from the Crown corporation.
EDC has put up $326-million (U.S.) to support Nortel's business outside of Canada and can terminate its commitment as of tomorrow.
The telecom network equipment company needs a waiver from EDC because it hasn't yet filed official 2003 results as it works to complete a restatement of financial results from Jan. 1, 2001, and onwards.
Nortel will likely make an announcement today, said Daniela Pizzuto, a spokeswoman for EDC, but said she couldn't comment further.
Negotiating a possible waiver is the latest step in the Nortel accounting saga, which began quietly last summer and exploded in March and April this year.
In late March, after Nortel first said the restatement work would delay official results, the Brampton, Ont.-based company received a temporary two-month waiver from EDC, announced at the deadline.
In early May, TD Securities Inc. said in a report that "it is realistic" the EDC support could be terminated.
Tina Warren, a Nortel spokeswoman, had no comment except to say the company is still in discussions with EDC.
Nortel's board of directors met in Ottawa yesterday, including its newest member, John Manley, Canada's former deputy prime minister. Bill Owens, a director and the company's new president and chief executive officer, met with Nortel employees earlier this week.
Mr. Owens replaced Frank Dunn, who along with two other top officials was fired for their accountability for the financial reporting problems.
Nortel has said that none of its results since Jan. 1, 2001, should be relied upon and that its reported profit of $732-million last year will be cut by about half.
Nortel shares closed at $5.24 (Canadian) on the Toronto Stock Exchange, up 35 cents or 7.2 per cent.
On Monday, the Ontario Securities Commission is to hold a hearing to consider whether to extend a cease-trade order it put in place May 17 on 161 Nortel executives, directors and insiders, including Mr. Dunn and Mr. Owens.
Yesterday, analyst Dayle Hogg of GMP Securities Ltd. said it was a positive sign that Mr. Manley had agreed to join Nortel's board.
"We can't imagine why anyone would take a board seat at Nortel at this time and incur the potential financial and reputational risk without carrying out extensive due diligence and gaining comfort that the issues at hand will be dealt with quickly," Mr. Hogg said in a report.
He noted, however, that the appointment doesn't precisely provide any answer as to when Nortel will complete its restatement.
Mr. Manley has met with the key figures at Nortel and others involved in the restatement.
In an interview on Wednesday he said that he had a great deal of confidence the board has acted appropriately and is committed to "getting the numbers right and getting the disclosure out as quickly as possible."
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