Olive's over ripe take on RIM / Nortel

For reasons that aren’t relevant here, I’ve lately been finding myself looking at The Toronto Star with more frequency. Which led me to a column by David Olive under the banner “Nortel-RIM could be PM’s Avro Arrow“.

His premise, as I understand it, is simple: PM Stephen Harper should intervene in the court auction of Nortel’s LTE division so that Research in Motion (RIM:TSX) can have a shot at bidding for the asset. As we have come to learn, RIM Co-CEO Jim Balsillie had some real concerns about certain details in the non-disclosure agreement that Nortel’s CCAA monitor wanted RIM to sign before being able to be part of the court-monitored auction process.

RIM, as some may recall, recently had their fingers burned by an NDA. The one that Certicom took them to Court over when RIM launched their hostile bid in 2008, after negotiations for a friendly acquisition failed. Certicom’s lawyers at Blakes LLP got the RIM bid knocked out by an Ontario Court, so it doesn’t surprise me that Mr. Basillie is paying close attention to the details of the agreement…assuming there are other Nortel assets that RIM desperately wants to acquire.

For the life of me, I don’t understand why the CCAA monitor would want to prevent LTE bidders from bidding on other Nortel assets in 12 months. (Maybe they’re trying to prevent IP tire kicking; but that’s what pre-qualifying bidders is about.)

The PM may agree that the monitor’s process is short-sighted, but there’s nothing about a CCAA proceeding that lends itself to interference by a Prime Minister; ask Premier Jean Charest about the perils of calling Judges. And there is no parallel to the Avro Arrow context; Nortel is in CCAA — which means that it can’t be in the PM’s in-basket.

The Arrow was a government financed defence project, back when a Soviet air attack over the Arctic was a real concern. Although it was the St. Laurent government that actually put the Arrow into the ether, it was Mr. Diefenbaker who allowed the Arrows to be cut to pieces…and thus the program’s cancellation became his albatross.

Nortel, however, was befelled by management errors, balance sheet challenges and changes in its underlying end markets. All that came to pass before Stephen Harper walked into the Langevin Block.

MRM