Lucent Buying Riverstone Assets

The struggling Ethernet gearmaker will file for bankruptcy.
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Lucent Technologies

(LU)

agreed to buy some assets from

Riverstone Networks

for $170 million.

As part of the deal, Santa Clara, Calif.-based Riverstone will file for Chapter 11 bankruptcy protection. Under section 363 of Chapter 11, solvent companies can file for protection from creditors in the name of conducting an orderly auction of their assets.

Buying the assets of Riverstone, a maker of carrier-grade Ethernet routers for the telecommunications industry, will complement Lucent's broadband, data and optical networking solutions, Lucent said. The Murray Hill, N.J., gearmaker currently resells Riverstone's systems to service providers worldwide to support consumer and business multimedia network services.

"Riverstone is a valued partner in a space that we believe will continue to grow," said Ken Wirth, president, Multimedia Network Solutions, Lucent Technologies. "This acquisition will enhance our ability to deliver large-scale Ethernet solutions and will allow us to accelerate the development of next-generation, carrier-grade Ethernet solutions that enable our customers to deliver broadband services to businesses and residential subscribers. This is good news for our mutual customers and a symbol of our commitment to provide carrier-grade Ethernet solutions to the market."

The transaction is subject to completion of a bankruptcy court-administered process under Riverstone's impending reorganization proceeding and other closing conditions.

Riverstone also said it would not be able to file its quarterly and annual report on time. In a filing Tuesday, the company says it has been consulting with the

Securities and Exchange Commission

over accounting matters. Riverstone says it's reviewing the timing of revenue recognition dating back to 2004. The company says it doesn't believe the bookkeeping questions represent accounting irregularities, and that there will be no impact on the company's cash position.

On Tuesday, Lucent shares dropped 4 cents to $2.66.