Shares of telephone maker Nortel Networks Corporation sank 68.8 per cent in Toronto after it was granted bankruptcy protection in Canada and the US on Wednesday.
Toronto-headquartered Nortel, which is the biggest maker of telecom equipment in North America, filed for bankruptcy ahead to its $107 million interest payment after reporting a $3.4 billion quarterly loss in November.
The company was later granted protection by the Ontario Superior Court in Toronto under the Companies' Creditors Arrangement Act.
The Toronto Stock Exchange (TSX) on Wednesday saw unprecedented offloading of Nortel shares which plunged 68.8 per cent to 12 cents. The steep fall from a 52-week high of $14 on 73.2 million shares represents a huge fall in the fortunes of the telecom giants.
Nortel pushed the composite index further into the bearish territory, dragging it down almost three percent to close at 8,688.36.
In the US, the company said, its subsidiaries, including Nortel Networks Inc and Nortel Networks Capital Corporation, had sought bankruptcy protection under Chapter 11 of the US Bankruptcy Code.
The company said some of its subsidiaries in Europe are also expected to file for bankruptcy protection.
The statement said Nortel's day-to-day operations will continue without interruption. ``Nortel remains 100% focused on serving customers worldwide through continued R&D investments and support of its product portfolio to fulfill customer needs,'' the statement said.
Nortel said bankruptcy protection will allow it to ``deal decisively with its cost and debt burden, to effectively restructure its operations and to narrow its strategic focus in an effective and timely manner.''
The company said the current global meltdown has hampered its transformation process commenced in 2005.
It said it will utilize its $2.4 billion cash position to preserve its liquidity and fund its restructuring process at this crucial juncture.
Nortel President and CEO Mike Zafirovski said, ``I am confident that the actions we're announcing today will be the fastest, most effective means to translate our improved operational efficiency, double-digit productivity, focused R&D and technology leadership into long-term success.''
He said Nortel will stay as a world leader in telecom, committed to delivering world-class services to its customers.
The company said its affiliates in Asia, Latin America and the Caribbean, and the Nortel Government Solutions are out of the preview of bankruptcy protection.