UPDATE 2-MatlinPatterson eyes strategic partner in Nortel bid

* Mulls tie-up with strategic partner in bid for Nortel

* Says its proposal will provide superior value (Adds details, background. In U.S. dollars unless noted)

By Euan Rocha

TORONTO, July 15 (Reuters) - MatlinPatterson is open to working with strategic partners in putting forward a comprehensive proposal to reorganize the businesses of bankrupt Canadian telecom equipment maker Nortel Networks (NRTLQ.PK), the U.S. private equity firm said on Wednesday.

MatlinPatterson, a major bondholder and Nortel creditor, has stated that it does not believe that the proposed sale of Nortel's key wireless technology unit to Nokia Siemens Networks [NSN.UL] maximizes value for Nortel stakeholders.

"We welcome the opportunity to work with potential strategic partners to leverage Nortel's resources and leading LTE technology long into the future," said MatlinPatterson in a statement.

On Tuesday, Nokia Siemens' head of U.S. operations, Sue Spradley, said a private equity-led reorganization would not solve Nortel's problems because Nortel no longer has the scale necessary to compete successfully in the telecom equipment industry. [ID:nLF26683]

The industry has been consolidating and leaving only a few global players -- market leader Ericsson (ERICb.ST), Huawei [HWT.UL], Nokia Siemens and Alcatel-Lucent (ALUA.PA).

If MatlinPatterson is able to partner with a strategic investor in its bid to reorganize Nortel, then analysts believe the bid would have a greater chance of success.

MatlinPatterson said it will propose an alternative that provides superior value and a better outcome for Nortel, its customers, suppliers, employees and other stakeholders.

Toronto-based Nortel, once the largest North American telecommunications equipment manufacturer, filed for bankruptcy protection in January, blaming the economic crisis for derailing a turnaround effort that began in 2005.

Duncan Stewart, an analyst at DSAM Consulting in Toronto said he expects MatlinPatterson to almost certainly hedge its risk by working with a syndicate on a plan to reorganize Nortel.

"They are presumably working with others and they might be the lead," he said, in a recent interview.

TIME CONSTRAINTS

Time is running short for the private equity firm as it scrambles to put forward a proposal for Nortel. MatlinPatterson will have to submit a reorganization proposal, or any alternative bid, before July 21, which is the deadline set by the U.S. Bankruptcy Court in Delaware.

Last month, Nokia Siemens Networks -- a joint venture of Nokia (NOK1V.HE) and Siemens (SIEGn.DE) -- made a $650 million "stalking horse" bid to acquire Nortel's advanced wireless technology business.