DBRS Downgrades Nortel’s Ratings to D

DBRS has today downgraded the ratings of Nortel Network Corporation, Nortel Networks Limited and Nortel Networks Capital Corporation (collectively, Nortel or the Company) to D from CCC with a Negative trend.

This rating action follows the Company’s announcement today that Nortel Networks Corporation, Nortel Networks Limited and certain other Canadian subsidiaries will seek creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in Canada.

Additionally, certain of the Company’s U.S. subsidiaries, including Nortel Networks Inc. and Nortel Networks Capital Corporation, have filed voluntary petitions in the United States under Chapter 11 of the U.S. Bankruptcy Code. Finally, certain European, Middle Eastern and African (EMEA) subsidiaries are expected to make filings in Europe.

DBRS has maintained its recovery ratings on Nortel’s various debt securities at RR4. This reflects DBRS’s expectation that the recovery prospect for the bondholders remains average (30% to 50%).

DBRS notes that Nortel had $2.4 billion of cash at December 31, 2008, which will help the Company fund its operations during the restructuring process.

Notes:
All figures are in U.S. dollars unless otherwise noted.

DBRS’s ratings on technology companies are primarily based on factors such as the product suite, the base of customers, the competitive landscape, research and development initiatives, gross operating margins and the financial profile.

This is a Corporate rating.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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