| HELSINKI/NEW YORK
HELSINKI/NEW YORK Nokia Siemens Networks will object in U.S. bankruptcy court to Ciena Corp's CIEN.O $769 million bid for Nortel's optical networking and carrier ethernet business, and is ready to raise its offer to $810 million in cash, the company said on Tuesday.
U.S. networking gear maker Ciena trumped an offer by Nokia Siemens and its financial partner, One Equity Partners, on November 22 in a three-day auction with an offer of $530 million in cash and $239 million in debt.
The U.S. Bankruptcy Court for the District of Delaware will decide whether to approve the deal on Wednesday.
"Along with our expert advisers, we continue to believe that the convertible notes offered by the competitive bidder carry significant risk and should not be valued the same as cash," said Nokia Siemens spokesman Barry French.
To fund the debt portion, Ciena plans to issue $239 million in the form of convertible notes due June 15, 2017, at an interest rate of 6 percent to 8 percent.
Nokia Siemens, a 50-50 joint venture of Nokia NOK1V.HE and Siemens (SIEGn.DE), joins one of Nortel's largest creditors, private equity firm MatlinPatterson, in objecting to the Ciena deal.
Last week, the private equity firm filed a limited objection in court, saying Nokia Siemens' offer exceeded the cash component of Ciena's offer by $200 million.
MatlinPatterson has sought more information from the court on the terms of Ciena's convertible notes.
Ciena shares rose nearly 2 percent on Nokia Siemens' plan, and closed up 1.1 percent at $12.28 on Nasdaq on Tuesday.
Last week, Ciena shares fell sharply after it won the auction as investors worried about how the company would integrate the assets, which are expected to double Ciena's size, and cope with an increased debt load.
The deal, if approved, would vault Ciena to third place in the optical network equipment market, behind rivals Alcatel-Lucent ALUA.PA and Huawei Technologies Co HWT.UL.
In October, Ciena entered into a stalking-horse agreement with Nortel to buy these assets for roughly $520 million, including $390 million in cash and 10 million in shares of Ciena stock. The agreement allowed the Canadian telecommunications company, which is selling assets after filing for bankruptcy in January, to seek higher offers.
Nokia Siemens, which teamed up with private equity firm One Equity, put in a final bid of $770 million, but Nortel chose Ciena.
Under their agreement, Nortel would have to pay Ciena about $21 million in breakup fees and expense reimbursements if it chooses another buyer.
A Ciena spokeswoman declined to comment. A MatlinPatterson spokesman declined to comment beyond the filing.
The case is Nortel Networks Inc, et al, No. 09-10138 (KG) in the U.S. Bankruptcy Court for the District of Delaware.
(Reporting by Tarmo Virki and Anupreeta Das, editing by Richard Chang, Leslie Gevirtz)