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Nortel UK goes into administration

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David Meyer ZDNet.co.uk

Published: 15 Jan 2009 17:38 GMT

Around 2,000 jobs could be under threat after Nortel, having filed in the US for bankruptcy protection just a day ago, decided to put its UK operation under administration.

However, Nortel UK's position as official network infrastructure provider for the London 2012 Olympic Games is not currently affected.

Administrators Ernst & Young announced the move on Thursday, describing it as part of Nortel's wider "restructuring process". Nortel filed for Chapter 11 bankruptcy protection on Wednesday.

"On a global basis, adverse economic conditions have made the current capital structure of Nortel Networks Inc unsustainable and it is imperative that the group addresses its financial position and the legacy costs burdening its balance sheet, to overcome current challenges and reposition itself for the future," the statement read. "The group concluded that the best way to effect this transformation was to undertake a restructuring process."

According to Ernst & Young's statement, the administration order was issued "in the best long-term interests of Nortel and its stakeholders".

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"The process of administration is expected to have no immediate impact on the company's day-to-day operations including employee pay and benefits, or on customer obligations," the statement read.

A spokesperson for Ernst & Young told ZDNet UK on Thursday afternoon that Nortel UK employed 2,004 staff members, but no immediate decision had been taken as to their future.

Nortel will remain a Tier 1 sponsor of the London 2012 Olympic Games, according to a statement on Thursday from Mario DiMascio, the Canadian telecoms infrastructure firm's vice president of enterprise business in the northern region.

"Our commitment to the Games as a Tier 1 local sponsor and official Network Infrastructure Provider remains unchanged as does our commitment to all our customers," DiMascio said in the statement.