TORONTO, ONTARIO, Oct. 7, 2009 (Marketwire) --

TORONTO, ONTARIO -- (Marketwire) -- 10/07/09 -- Nortel(1) Networks Corporation (OTCBB: NRTLQ) today announced that it, its principal operating subsidiary Nortel Networks Limited (NNL) and certain of its other subsidiaries, including Nortel Networks Inc. and Nortel Networks UK Limited, have entered into a "stalking horse" asset sale agreement with Ciena for its North American, Caribbean and Latin America (CALA) and Asian Optical Networking and Carrier Ethernet businesses, and an asset sale agreement with Ciena for the Europe, Middle East and Africa (EMEA) portion of its Optical Networking and Carrier Ethernet businesses for a purchase price of US$390 million in cash and 10 million shares of Ciena common stock. Based on the closing price of Ciena's common stock on NASDAQ on October 6, 2009, the shares to be issued by Ciena have a current market value of approximately US$131 million, bringing the implied total value of the purchase consideration to approximately US$521 million. The agreements with Ciena do not provide for any adjustment of the share consideration for stock price fluctuations prior to closing, and Nortel will be subject to certain resale restrictions in respect of the Ciena shares.

These agreements include the planned sale of substantially all assets of the Optical Networking and Carrier Ethernet businesses globally, including Nortel's OME 6500, OM 5000 and CPL platforms, its industry-leading 40G/100G technology, and the related services business. The agreements also include all patents and intellectual property that are predominantly used in the businesses, and provide for the transition of substantially all of Nortel's Optical Networking and Carrier Ethernet customer contracts.

Under the terms of these agreements and subject to any changes that may occur through the stalking horse and sale process, at least 2,000 employees (more than 85 percent of the global Optical Networking and Carrier Ethernet employee base) would be offered employment with Ciena. This includes employees assigned to the Optical Networking and Carrier Ethernet businesses in certain EMEA jurisdictions who would transfer to Ciena by operation of law.

"Today's announcement is a positive step forward for the future of Nortel's Optical Networking and Carrier Ethernet customers and employees," said Philippe Morin, president, Metro Ethernet Networks, Nortel. "The sale of these businesses to a strong and stable buyer enables the innovation of one of the foremost leaders in the optical industry to continue to thrive."

"Employees have done a tremendous job stabilizing our business under challenging conditions while continuing to deliver on product and service commitments. We are particularly pleased that the agreements would offer a significant number of the employees in the Optical Networking and Carrier Ethernet teams an opportunity to continue their world-class innovation," said Morin.

Nortel's Optical Networking business is the leader in next-generation 40G/100G optical technology and one of the largest providers of optical networking equipment in the world, having deployed 430,000 optical nodes to over 1,000 customers in more than 65 countries worldwide. Nortel's ability to send 40G traffic over today's existing 10G networks allows service providers to quadruple bandwidth capacity without the need for new fiber deployments or complex network re-engineering. Nortel has secured 52 wins to date for its 40G optical solution and has announced eight successful field trials for its 100G equipment planned for availability later this year.

Details of Sale Process

Nortel will file the stalking horse asset sale agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required.

In relation to the EMEA entities to which they are appointed, the UK Joint Administrators have the authority, without further court approval, to enter into the EMEA asset sale agreement on behalf of those relevant Nortel entities.