Ciena Corp and a Nokia Siemens Networks squared off in U.S. and Canadian courts on Wednesday to press their claims to the highest bid in an auction of a unit of bankrupt Nortel Networks Inc.
Network equipment maker Ciena in November trumped an offer by Nokia Siemens Networks and its financial partner, One Equity Partners, with an offer of $530 million in cash and $239 million in debt for Nortel's optical networking and carrier ethernet business.
On Tuesday, the 50-50 joint venture of Nokia of Finland and Siemens of Germany said it was ready to raise its offer to $810 million in cash.
An attorney for Nortel urged a Delaware bankruptcy court judge to accept Ciena's bid as the winner and described Nokia Siemens as a frustrated bidder.
The hearing was being held simultaneously in U.S. bankruptcy court and a Canadian court.
Nortel declared bankruptcy early in the year and has been auctioning off its businesses to raise money to pay creditors.
Nokia Siemens and creditors asked for the auction to be reopened, with Nokia Siemens' latest offer serving as the first bid.
An attorney for Ciena told the court it would not participate if the auction were reopened.
Nortel's attorney said the auction was run openly and effectively and said the court can not turn back the clock to the night the auction ended.
We can't do that. It's not fair to employees, to customers, to the company and not fair to the counterparties, said James Bromley of Cleary Gottlieb Steen & Hamilton, which represents Nortel.
Ciena offered $530 million in cash and $239 million in convertible debt. Nokia Siemens bid $770 million in cash at the end of the three-day auction, and, according to Bromley, originally gave the Nortel team 10 minutes to consider it.
We literally had to scream for everyone to get out of the room to consider the bid, said Bromley. He said they chose Ciena and gave Nokia Siemens a chance to respond, which they did not.
Nokia Siemens objected to the worth of the Ciena bid, arguing the convertible security was being overvalued.
They refused to provide a valuation and said it was par, said an attorney for Nokia Siemens. If it is valued at 95 percent of par, we're the winner. There is not a lot of margin of error.
Unsecured creditors also pressed for a reopening of the auction.
The judges in Canada and the United States were expected to rule later on Wednesday.
Shares of Ciena rose 6.1 percent to $13.03 on Nasdaq at mid-afternoon.
The case is Nortel Networks Inc, et al, No. 09-10138 in the U.S. Bankruptcy Court for the District of Delaware.
(Reporting by Tom Hals; Editing by Richard Chang)