* Xinmao has bid financing from major China bank-adviser
* Xinmao points to synergies with Draka in optical fibre
* Says can double size of Draka in three to five years
* Draka shares pare losses, up 1 percent
(Releads, adds links to graphics on global cable sector)
By Terril Yue Jones and Greg Roumeliotis
BEIJING/AMSTERDAM, Nov 24 (Reuters) - China's Xinmao Group moved to dispel doubts over its $1.3 billion offer for Dutch cable maker Draka on Wednesday, saying it had backing from a Chinese bank for its proposed takeover.
Xinmao has lined up "one of the larger banks in China to provide the funds as necessary" and has submitted a letter of commitment to Draka, Joseph Krant of Amsterdam-based Catalyst Advisors, which is advising Xinmao, told Reuters.
Draka's shares reversed earlier losses on the news and were trading up 1 percent at 19.46 euros at 1500 GMT, short of Xinmao's 20.50 euro-per-share cash offer.
Draka has become the darling of the cable making industry, with France's Nexans, Italy's Prysmian and Xinmao all making approaches as they chase a slice of the market for cables in anything from telecommunications to cars.
Draka is a leader in elevator cables. It designed and provided cables for the 58 lifts of the world's tallest skyscraper, the 828 metre Burj Khalifa in Dubai.
A three-way bidding war is possible with Nexans, the world's largest cable maker, due to make its intentions clear after the French stock market close. Its 731 million euro ($979.1 million) approach to Draka last month was rejected.
Xinmao's interest came out of the blue, taking Draka shareholders and industry analysts by surprise. While a successful takeover by little-known Xinmao would aid China's "Triple Play" plans to roll out broadband networks, European analysts have questioned the viability of its offer.
"This is a formal offer. Comments that Xinmao is not a serious contender are nonsense. We don't underestimate the Chinese and I would recommend that others do not as well," Krant said.
"We felt if we could acquire it, we could grow this company ... in Asia-Pacific in optical fibres and optical communication, and double the size of the company in three to five years," he added.
ANOTHER HUMMER?
Xinmao's offer values Draka's equity at about 1 billion euros, Tianjin Xinmao Science & Technology, Xinmao's listed arm, confirmed in a Shenzhen stock exchange filing. Xinmao employs around 30,000 people.
Xinmao said the two sides were "in detailed discussions about the deal", although it still needed Chinese government approval. Meanwhile, Draka shifted its position slightly, saying it would begin talks with Xinmao, even as it described Prysmian's offer as a sensible all-European combination.
"Whether the deal will go through is still uncertain," said Xinmao, whose privately owned parent was founded in 2000 by a former Chinese air force lieutenant.
A Tianjin spokeswoman said the minimum offer size would be 5 billion yuan ($753 million), the value of the 48.5 percent stake held in Draka by secretive family investment fund Flint Beheer.
Krant said he expected due diligence to continue for several weeks and that Xinmao has had very little contact with Flint.
Xinmao said it had sent its offer to Draka's management board and supervisory committee. Draka executives have said they have only received a press release and no formal offer.
China is set to unveil plans to expand its broadband to integrate TV, Internet and telephone networks by the end of 2015, an effort that could cost between $50 billion and $100 billion.
"Fibre optic cable is something everyone is going to have to put down. Fibre optic cables are cheaper to put down than copper cables because the price of copper has gone up so much," said Paul Wuh, a Hong Kong based analyst with Samsung Securities.
China accounted for 46 percent of global demand for fibre optic cable in 2009, though consumption from Chinese network operators dropped by 11 percent in the first nine months of 2010, according to market research firm CRU.
"The capacity of optic fibre in China doubled in the past year and I can't see any major benefits for buying a foreign fibre cable maker," a Shenzhen-based telecoms analyst said.
"It may be like Tengzhong wanting to buy Hummer -- a purely marketing act," he said. The Chinese heavy equipment group failed in a bid to buy the SUV brand from General Motors. (Additional reporting by Melanie Lee, Michael Smith, Fang Yan, Heng Xie and Shengnan Zhang; Editing by Michael Flaherty and Alexander Smith) ($1=.7466 Euro)