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Nortel seeking $1B cash
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August 8, 2001: 7:06 p.m. ET
Troubled telecom equipment maker selling notes to raise needed cash
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NEW YORK (CNNfn) - Canadian telecom equipment maker Nortel Networks Corp. has announced plans to raise $1 billion through a sale of bonds.
The company, which last month posted a $19.4 billion second-quarter loss that was one of the largest in corporate history, will seek to raise funds despite a debt rating that is barely investment grade. But it has announced deep staff cuts and the elimination of its dividend as it tries to save cash in the face of a sharp downturn in purchases by its telecom customers.
"Obviously cash conservation is a No. 1 priority as we make sure we get our cost structure in line in this period of very low revenue," CEO John Roth told CNNfn's Before Hours program in June, the day he warned of the problems. "This is an absolute surprise. We've never seen a downturn this rapid."
The company said that the proceeds of the convertible notes it is seeking to sell will be used for general corporate purposes and those of its subsidiaries.
Nortel also has had to indefinitely delay plans for an initial public offering for its lucrative fiber optic division.
Shares of Brampton, Ontario-based Nortel (NT: Research, Estimates) fell 53 cents to $7.62 in trading Wednesday, putting it just above its 52-week low share price, and less than 10 percent of its 52-week high of $83.68 that it hit about a year ago. 
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Nortel Networks
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