EDC gives Nortel $750 million

Fiber Optics Weekly Update, Feb 21, 2003

Nortel Networks announced that it has entered into an agreement with Export Development Canada (EDC) regarding arrangements to provide for support, on a secured basis, of certain Nortel Networks obligations arising out of normal course business activities including letters of credit, letters of guarantee, indemnity arrangements, performance bonds, surety bonds, receivables sales, securitizations, and similar instruments issued or entered into for the benefit of Nortel Networks. Nortel Networks previously announced on December 13, 2002 that it was in negotiations with EDC regarding these arrangements.

The EDC Master Facility provides for up to US$750 million in performance-related support and is comprised of up to US$300 million of committed support for performance bonds or similar instruments (within certain parameters); up to US$150 million of uncommitted support for receivables sales/ securitizations; and up to US$300 million of additional uncommitted support for performance bonds and receivable sales/ securitizations.

These arrangements are consistent with the company's business needs for the foreseeable future and will provide the company with support for its operations as well as facilitate improved liquidity.

Nortel Networks obligations under the EDC Master Facility are secured under existing security agreements that pledge substantially all of the assets of Nortel Networks in favor of certain banks (under the company's syndicated credit facilities and which otherwise provide credit support to the company) and the holders of Nortel Networks public debt securities. In addition and as previously announced, Nortel Networks has US$750 million in available and undrawn syndicated bank credit facilities which expire in April 2005.

The company also announced that its Board of Directors has approved the submission of certain matters to shareholders at the company's annual and special meeting of shareholders on April 24, 2003. This includes a special resolution relating to the company's previously announced plan to seek approval for a proposed consolidation of its outstanding common shares (more commonly known as a "reverse stock split"). Shareholders will be asked to give authority to the company's Board of Directors to implement a consolidation of its outstanding common shares, in its sole discretion, at any time prior to April 15, 2004. If a consolidation is determined to be in the best interests of the company and its shareholders, the Board of Directors will select a consolidation ratio within the range of one post-consolidation common share for every five pre-consolidation common shares to one post-consolidation common share for every ten pre-consolidation common shares. There will also be a resolution relating to a reconfirmation o f the company's shareholder rights plan (as amended). The rights plan is being submitted for approval to shareholders in accordance with the terms of the plan that was originally approved by shareholders in April 2000. Materials related to the shareholders meeting will be filed with regulatory authorities and mailed to shareholders in the normal course in advance of the meeting.

In connection with the solicitation of proxies with respect to the 2003 annual and special meeting of common shareholders of Nortel Networks Corporation, the company will file with the United States Securities and Exchange Commission (the "SEC"), and will furnish to common shareholders of the company, a proxy statement, which shareholders are advised to read (when available) as it will contain important information. Shareholders will be able to obtain a free copy of such proxy statement (when available) and other relevant documents filed with the SEC from the SEC website at www.sec.gov. Such proxy statement will also, when available, be provided for free to shareholders by the company.