Bankruptcy precautions will not affect London Olympics, says Nortel

Nortel Networks ...

Nortel Networks has hired lawyers to study possible bankruptcy protection in case its restructuring plan fails, the Wall Street Journal reported today.

The embattled network equipment maker, North America's biggest, is also exploring potential help from the Canadian government, the paper said.

A Nortel spokesman said the move will not affect the firm's involvement with the London 2012 Olympics or the 2010 Winter Olympics in Vancouver.

Nortel will provide BT with routers, switches and networking equipment required to build and support the London Games' network and communications infrastructure.

She said Nortel was reshaping the business to better serve its customers. She said credit rating agency Standard & Poor's reported a fortnight ago that "Nortel should be able to sustain adequate levels of liquidity in the next 12 to 18 months".

"We have no debt maturity until 2011, and we are preserving and strengthening our cash position. On 10 November, we put in place an aggressive plan to bring down costs by $400m with a minimum level of cash outlay. The goals we laid out (then) have not changed. We remain focused on executing a significant shift to our operating model and cost base to reflect the economic environment that we are now in. Our commitment is to remain an innovation-driven organisation."

Nortel was one of the dotcom boom's high flyers. It has found it hard to recover since then. In February it said it would lay off 2,200 staff, and last quarter sacked another 1,300 after sales dropped 14% to $1.45bn.

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