Clement pledges $30M in short-term aid for Nortel

The federal government indicated a willingness Wednesday to help Nortel Networks, on the same day as the one-time technology giant filed for bankruptcy protection in both Ontario and Delaware.

Federal Industry Minister Tony Clement said Ottawa is willing to provide some financing through Export Development Canada, a government agency, to help Nortel restructure and emerge from bankruptcy protection as a viable company.

"The government of Canada appreciates the importance of the telecommunications industry to our economy and will continue to work with Nortel during its restructuring through Export Development Canada," Clement said in a statement.

EDC has agreed to provide up to $30 million in short-term financing through its existing bond facility, Clement said.

The minister added that EDC is open to discussing post-bankruptcy-filing financing with Nortel in conjunction with other financial institutions.

Transport and Infrastructure Minister John Baird told CBC News said he and his government would be watching developments with the company, which is North America's biggest maker of telecom gear.

"Obviously, the board took some significant action to allow them to re-organize," said Baird, an MP from the Ottawa area, where Nortel's research and development headquarters are located.

"We're going to follow that very closely and work constructively with them."

But Baird also reminded people Nortel has had some "fundamental problems," including significant accounting scandals and criminal investigations.

"There has been some real concerns about restructuring," he said.

Earlier Nortel bid for Ontario aid rejected

As the federal government pledged help for the troubled company, Nortel's home province of Ontario acknowledged it rejected a recent appeal for funds.

Ontario Premier Dalton McGuinty initially said Nortel had not applied for provincial aid, but his statement was later corrected by a government spokeswoman.

The province turned down Nortel's application for money under its Next Generation of Jobs Fund because the company's proposal didn't fit with what the fund was designed to do, said Greg Crone, a spokesman for Ontario Economic Development Minister Michael Bryant.

"They had challenges which transcended the fund," Crone said.

The $1.15-billion fund, announced this spring, was created to fuel innovation and help companies create jobs in the province.

"I remain hopeful that Nortel will experience ultimately a renaissance of some kind and that will be of benefit to the Ontario economy and to Ontario workers," McGuinty said.

Corrections and ClarificationsJohn Baird is the federal transport and infrastructure minister, not the trade minister, as initially reported. Jan. 14, 2009 | 7:07 p.m. ETWith files from the Canadian Press