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A battle worth billions of dollars appears to be brewing over the fate of telecom equipment maker Nortel Networks, a conflict that currently pits private equity firm MatlinPatterson Global Advisors against Nortel rival Nokia Siemens Networks.

MatlinPatterson, which specializes in distressed investments and is a major bondholder and Nortel creditor, yesterday announced its intentions to submit a bid for Nortel that would keep the Canadian firm intact.

The action puts MatlinPatterson in direct competition with Nokia Siemens, which last month announced a US$650 million play for Nortel's wireless businesses--including CDMA and LTE technologies--as part of a bankruptcy auction of the company's assets.

Analysts quoted by Reuters speculated Nortel's value at $3 billion if sold in one piece.

“MatlinPatterson believes Nortel is a solid company with a valuable brand, talented employees and innovative technologies,” the firm said in a statement.

“It is interested in retaining, for current investors, the inherent value of the company rather than merely accepting a 'fire sale' of its core asset followed by the wholesale liquidation of the remaining businesses.

“The firm has a proven track-record of leading successful reorganizations and is currently conducting due diligence and meeting with other potentially interested parties as part of our effort to prepare an alternative proposal,” MatlinPatterson said.

The firm, which owns $400 million--about 10%--of Nortel's bonds, is believed to be working with other debtholders on a plan to swap debt for a stake in a reorganized Nortel, according to The Ottawa Citizen.

Analysts quoted by Reuters said MatlinPatterson's endeavor may well pay off--and likely would please Canadian interests--but pointed to the massive difficulties Nortel has faced so far in its attempts to remain unbroken.

Bids for Nortel are due July 21 and the bankruptcy auction date is set for July 24 in New York City. As the “stalking horse bidder,” Nokia Siemens has the ability to set the floor price for bids and match any higher offers for Nortel's businesses.

For more:
- see this Reuters article
- see this Ottawa Citizen article
- see this New York Times post