Australian fund Macquarie is raising legal hurdles over a plan backed by Italy’s Treasury for state lender CDP to join forces with U.S. fund KKR to buy Telecom Italia’s (TIM) landline grid, three sources said.

TIM directors have set a final deadline of June 9 for potential improved offers by the U.S. private equity firm and a rival consortium comprising CDP and Macquarie, worth 21 billion euros and 19.3 billion euros respectively.

TIM has deemed both not yet adequate. TIM shares fell as much as 5.4% on Tuesday morning.

People familiar with the matter told Reuters this month the Treasury would welcome CDP joining forces with KKR for TIM’s prized grid, with one source saying government officials were pushing for CDP to drop its separate proposal.

But Macquarie is raising legal issues about a possible alliance between CDP and KKR, three sources close to the matter told Reuters late on Monday.

CDP and Macquarie are co-investors in Open Fiber, a smaller rival to TIM.

According to the sources, some clauses included in the Open Fiber shareholder pact could give the Australian fund some leeway to complicate any CDP decision to drop the alliance with Macquarie and join KKR’s proposal.

One of them said Macquarie was aiming to improve its offer with CDP ahead of next month’s deadline.

A source close to CDP said the state lender was still working with Macquarie to provide some clarifications TIM had requested over their latest offer, adding no decision has been taken yet.

The sale of TIM’s most valuable asset is the main option for the phone group to cut its 26 billion euro debt pile.

KKR’s approach is seen at present as the stronger alternative by TIM CEO Pietro Labriola and some leading government officials, sources have previously told Reuters.