Nortel asks courts for cash to keep staff

Nortel Networks Corp.has asked U.S. and Canadian courts to approve an employee retention plan designed to keep some key staff from quitting their jobs.

The insolvent Canadian telecom equipment maker says that buyers for its various business divisions have made it clear they want Nortel to hang onto employees to ensure that the transition of its businesses goes smoothly.

It says that includes jobs ranging from finance to supply chain management.

"In order to meet our restructuring objectives, bring the process to conclusion and to fulfil our obligations to provide transitional services to purchasers of our businesses, it is essential that we retain the personnel with the required skills, experience and institutional knowledge," Nortel chairman David Richardson said.

Nortel says the plan was created with the help of independent advisers who factored in the possibility that more stable and competitive jobs could lure staff away from the company.

The company did not disclose exactly how much cash it is seeking to retain talent, but noted that astipulation made in the sales agreements mandates that roughly 88 per cent of the costs would be funded by the companies that buy Nortel's businesses.

Nortel says it has made more than $2 billion USfrom the completed sales of its assets, while another $1 billion is expected once several previously announced sales are completed.

Earlier this week, the company reached a settlement with employees and pensioners that will see the company continue to administer its negotiated pension plan and its managerial and non-negotiated pension plan until the end of September, when a new administrator will be appointed.

Also last week, the Ontario government agreed topartially guarantee the pensions of Nortel employees, who are facing a $2.5-billion shortfall in their pension plan.