Nortel Announces US$45 Million Allocation Settlement Agreement with APAC and CALA Nortel Entities

TORONTO, ONTARIO–(Marketwire – June 19, 2012) – Nortel⁽¹⁾ Networks Corporation (OTCBB:NRTLQ) today announced that it, Nortel Networks Limited (NNL), and certain other Nortel entities including Nortel Networks Inc, Nortel Networks UK Limited (in administration) and Nortel Networks S.A. (in administration and liquidation judicaire) have entered into an Allocation Settlement Agreement (Agreement) with Nortel entities in the Asia Pacific (APAC) and Caribbean and Latin America (CALA) regions (4^th Estate Entities) providing for, among other matters, a final allocation to the 4^th Estate Entities from the sale proceeds of Nortel’s businesses.

Under the terms of the Agreement, a total of US$45 million from the sale proceeds held in escrow will be allocated among the 4^th Estate Entities that participated in the various global business sales. The Agreement further provides for acknowledgement and agreement on inter-company payables and receivables among the 4^th Estate Entities as well as between the 4^th Estate Entities and other Nortel entities party to the Agreement, as at a certain date. Thus, conclusion of the Agreement will enable the 4^th Estate Entities to commence liquidation proceedings in their respective jurisdictions, all part of Nortel’s global wind down and another important step toward the conclusion of the creditor protection proceedings.

The Agreement is subject to court approval in Canada and the U.S. Upon receipt of court approvals and completion of the Agreement, the 4^th Estate Entities will have no further claim to the sale proceeds held in escrow and no longer be a party to the mediation. As previously reported, the current mediation process commenced with an introductory session held on April 24, 2012 before the court-appointed mediator, the Honourable Warren K. Winkler, Chief Justice of Ontario. Apart from the allocation provided for under the Agreement as described above, the mediation process continues with respect to the determination of inter-estate matters including the allocation of the remainder of the sale proceeds among the various other Nortel entities that participated in the sales of Nortel’s businesses.

As previously announced, Nortel does not expect that the Company’s common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.