The Nortel Story [update will be available shortly]
March 2018
Dear members,
The receipt of the second tranche of distributions (of £354m) marked a significant milestone in The Nortel Story. It takes the total recoveries to over £1Bn and almost certainly guarantees that we have recovered enough assets to fulfil our dream of being able to buy sufficient member benefits to ensure we can exit the PPF assessment and proceed to buyout with our chosen insurance partner(s). We have calculated the member benefits that we believe we can purchase and letters have now been sent to individual members detailing our estimates of the options available assuming prudent levels of future recoveries in 2018. It is therefore appropriate to mark this milestone with a summary of the recovery efforts which are in effect drawing to a close. In chess parlance, the opening and middle game period have come to an end after 9 long years and we are now in the end game; we have reached the beginning of the end! The attached reports detail many of the issues and highlights that we faced along the way. In essence, the reports have been prepared principally for our members but also for the benefit of any other Trustee Boards that find themselves in such unfortunate circumstances.
We have set out below 2 reports:
- The Nortel Story: This is a detailed explanation of the Nortel case which highlights the facts leading up to the recovery, and the milestones along the way.
- The Trustees’ perspective on their journey so far: Highlighting some of the key questions that we needed to answer during the journey.
In summary, as you can see from the above documents, it is appropriate to consider whether it has all been worthwhile. We have spent tens of millions of pounds in investigations and fees to advisers (including legal costs for many lines of enquiry and court actions). We could have settled at an early stage but that would have committed the Plan (& its members) to life within the PPF. We believe that we are on the way to recovering some £500m+ more than is necessary to buy PPF benefits. That money will be some compensation to the members and the beneficiaries of those who have died along the way. However, we have to recognise that still leaves many members short of their full plan benefits. Based on our estimate of recoveries we believe we will be providing (on average) 72% of full plan benefits to our members.
I want to pay tribute to my fellow Trustees who stuck with the arguments and persevered to get the best deal for our members. We were at all times focussed on our members’ best interests. It has been hard work but we have achieved a satisfactory outcome which exceeded our original expectations.
I also want to pay tribute to the PPF who could so easily have abandoned the pursuit and settled at any time, but chose to support the Plan and its Trustees and went the extra mile in an effort to secure better terms all round. We worked seamlessly together as a team and the Trustees took great comfort from their pragmatic and business-like approach.
Finally, it would be remiss of me not to thank our advisers and particularly those in the UK: Hogan Lovells and PwC and their lead partners Angela Dimsdale Gill and Jonathon Land. These two individuals did a superb job in marshalling their resources and helping us with our thoughts and arguments and guiding us through the enormously complicated legal and financial framework of a global negotiated settlement. In addition, Neil Mobbs, the Scheme Actuary has done a tremendous job in helping us to make sense of the numbers and understand the implications for the Plan of various recovery levels.
The end-game is nigh and I would like to think that the team of Trustees and advisers have made a small contribution to history and achieved a worthwhile result for our members.
Many thanks,
David
Chair of Trustees of the Nortel Networks UK Pension Plan