Vendor financing, just like Nokia is doing. Did Mot give them 150 percent of what they needed? Nice "backfire";-( Hope Nokia does better, time will tell.
Telsim misses $728m payment to Motorola
By Nikki Tait and Christopher Bowe in Chicago
Published: May 14 2001 23:33GMT | Last Updated: May 14 2001 23:47GMT
Motorola, the US telecoms equipment and semiconductor manufacturer, disclosed in an official filing late on Monday that it did not receive a $728m repayment from Telsim, Turkey's number two wireless carrier.
News of the Telsim problems comes at a time when Motorola itself is facing difficult conditions in both its cellular phones and semiconductor businesses.
The repayment was part of a $2bn vendor financing package and had been due at the end of April.
In a regular quarterly filing with the US Securities and Exchange Commission, Motorola said that Telsim now had 30 business days in which to address this non-payment, after which a formal default would be declared.
Motorola and other technology groups including Cisco Systems and Lucent Technologies, have adopted vendor financing, loaning money to customers to buy their products, in order to boost sales in the past few years. The practice has backfired recently as business has slowed and many smaller customers have defaulted on payments.
Motorola's collateral for the vendor financing package is the ability to receive or sell 66 per cent of the stock in Telsim.
Motorola said on Monday night that it was working with Telsim on a payment schedule and officials said that they believed "the situation would turn round".
The company said that the amount of the Telsim package outstanding had risen in recent weeks because of interest accrued and additional funds provided.
According to Motorola, Telsim's problems in meeting the repayment schedule stem from fall-out from the recent crisis in the Turkish economy and the effects of the currency devaluation.
The currency has dropped by 40 per cent since February.
The International Monetary Fund is meeting to decide whether it should release the first tranche of a $8bn emergency loan. Turkey now has all the required legislation in place to be eligible.
The difficulties faced by Motorola's cellular and semiconductor businesses caused the company to post an operating loss in the first quarter of 2001.
The company, however, has stressed recently - in the face of a flurry of adverse rumours - that it does not face liquidity problems and has sufficient balance sheet flexibility.
news.ft.com |
