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FRANKFURT, April 24 (Reuters) - German telecoms group Freenet sees room to improve the terms of a deal for Sunrise Communications, in which it is the largest shareholder, to buy Liberty Global's Swiss UPC cable business, CFO Ingo Arnold said.
Freenet, which owns 24.5 percent of Sunrise, earlier this month blocked the Swiss company's plans to raise fresh capital that would have helped finance a cash bid to buy UPC in a deal worth $6.3 billion.
The deal has not fallen through, however, and Freenet said it would observe how UPC performs to see whether its valuation is justified in the run-up to a Sunrise shareholder meeting expected this autumn where a simple majority would be needed to agree the capital hike.
"Sunrise management stands behind the deal," Arnold told Reuters in an interview. "For new shareholders it can be attractive, but for existing ones it is definitely not as they take all the risks."
Arnold reiterated concerns expressed by Freenet Chief Executive Christian Vilanek, who has said that rather than an all-cash deal, he would prefer a merger in which Liberty Global bears some of the risks.
He said he was not aware of any talks on the matter, but added that Freenet's preferred option would be to renegotiate the deal and optimise its structure. Failing that, Sunrise would remain viable as a standalone business, he said.
"Optimisation looks possible with the willingness of both parties," Arnold told Reuters.
Liberty is, meanwhile, selling off cable assets in Europe and a major deal to sell German-centred operations to Vodafone is currently under review by the European Commission.
Although the Commission has not raised any major concerns about the deal, Arnold said should the regulator require any assets to be spun off to clear it, Freenet would look at the opportunity.
Reporting by Douglas Busvine Editing by Riham Alkousaa and Emelia Sithole-Matarise