Nortel Repaying $50m to Koor, Telrad Three Months Early

Nortel Networks today repaid Koor Industries (NYSE:KOR) and Telrad Networks $50.4 million before its due date.

Koor received $37.8 million. Its CEO, Jonathan Kolber, who also chairs Telrad, said the companies will use the repaid sums to reduce their debts to the banks, and to improve the group's flexibility in locating new investment opportunities.

Koor and Telrad lent the money to Nortel, the giant Canadian phone company, in August 2000. The original repayment date was August 2003. Nortel preferred to repay early after the two Israeli companies agreed to forgo interest differences on the amount from the date of repayment to the original repayment date.

Koor also advised that it and Telrad will be exercising their put option to sell 28% of Nortel Israel's equity to Nortel Networks, for $3.9 million.

The put is exercisable in October 2003, but the two firms may elect to exercise it beforehand.

The loan originated from the split-up of Telrad's original business, when it sold part of its operations to Nortel Networks. Under that agreement, Nortel was to pay $50 million by August 2003, and this is the sum is has decided to pay early.