Northern Telecom Ltd., the Canadian telecommunications company, has formed a subsidiary specializing in data security technology.

The independent unit, Entrust Technologies Inc., is the successor of Nortel Secure Networks, which originated the Entrust line of public key encryption and digital signature products for Internet and intranet communications.

The new company will have headquarters in Ottawa and offices in New York, North Carolina, and California. Northern Telecom owns a majority interest, with minority shares held by Olympus Partners, acting as lead investor, along with J.P. Morgan Investment Management, Societe Generale, T. Rowe Price Threshold Funds, and Donaldson, Lufkin & Jenrette Securities Corp. The investor group purchased a combined $26 million of Entrust Technologies common stock, with Donaldson as agent for the private placement.

Peter Currie, senior vice president and chief financial officer of Northern Telecom, said the spinoff had a twofold objective: "To increase the return on investment to Nortel and its shareholders, and to continue to foster the entrepreneurial spirit and vigor so characteristic of this market."

John Ryan, a 15-year Northern Telecom veteran who was vice president and general manager of multimedia and Internet solutions, was named Entrust's interim chief executive officer. Mr. Ryan plans to make a major presentation about Entrust strategy Jan. 30 at the RSA Data Security Conference in San Francisco.

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