Telecommunications equipment manufacturer Nortel (News - Alert) Networks Corporation, Nortel Networks Limited and their Canadian subsidiaries that had filed for creditor protection under CCAA, collectively, Nortel, have reportedly now reached an agreement on certain employment related matters regarding former Canadian Nortel employees, including Nortel's Canadian registered pension plans and benefits for Canadian pensioners and Nortel employees on long term disability, or “LTD.”

 

According to company officials, Nortel has entered into a settlement agreement with court-appointed representatives of its Canadian former employees, pensioners and LTD beneficiaries, the court-appointed representative counsel to such parties, Koskie Minsky LLP, the CAW Canada and Nortel's court-appointed Monitor. The Settlement Agreement is subject to, various other approvals including that of the Ontario Superior Court of Justice.

 

As per this settlement, Nortel will continue to administer the Nortel Networks Negotiated Pension Plan and the Nortel Networks Limited Managerial and Non-Negotiated Pension Plan until September 30, 2010, at which point these pension plans will be transitioned, in accordance with the Ontario Pension Benefits Act, to a new administrator appointed by the Superintendent of Financial Services.

 

Eventually, Nortel and the Monitor have agreed to take all reasonable steps to complete the transfer of the administration of the pension plans to the new administrator. Nortel also mentioned that it will continue to fund these pension plans as per the current service and special payments it has been making during the course of the CCAA proceedings through March 31, 2010, and thereafter will make current service payments until September 30, 2010.

 

“We are pleased to have come to a resolution on these important matters,” said David Richardson (News - Alert), chairman, Nortel. “We understand the need to provide clarity to former employees as well as several months of certainty that will allow beneficiaries to make alternate plans.”

 

Also, for the rest of 2010, Nortel has decided to continue to pay medical and dental benefits to Nortel pensioners and survivors and Nortel LTD beneficiaries in accordance with the current benefit plan terms and conditions. Life insurance benefits will continue unchanged until December 31, 2010 and will continue to be funded consistent with 2009 funding. Further, Nortel will pay income benefits to the LTD beneficiaries and to those receiving survivor income benefits and survivor transition benefits through December 31, 2010, which payments will be made directly by Nortel. The employment of the LTD beneficiaries will terminate on December 31, 2010.

 

 “The Board of Directors and Nortel's management team have been working diligently with its advisors and stakeholders to reach an agreement that is as fair as possible in the circumstances, and that will result in almost two years of medical, dental and LTD coverage, an unusually lengthy period of time for companies under CCAA,” Richardson said.

 

Richardson also said that in aggregate, for the period from filing for creditor protection until the respective end dates announced today, Nortel will pay approximately $100 million to the pension plans and towards benefits.

 

The parties have agreed to work toward a court-approved distribution, in 2010, of the assets of Nortel's Health and Welfare Trust.