Marconi shareholders 'to lose all'
COMMENTS: This is the result when a company become run its creditors. Keep the eyes in the banks that finances LU and NT
Marconi shareholders are set to see the value of their stock become almost worthless when a survival deal is signed later this week, according to reports.
The troubled telecoms equipment firm is expected to announce how it will restructure its crippling £4bn ($6.1bn) debt mountain, within the next few days.
Some newspaper reports have suggested that Marconi will hand over all but 1% of the firm to its banks and creditors, while the Sunday Telegraph said it would go into "voluntary liquidation".
Either way, such a deal would signal the end of the road for Marconi, once a champion of the new economy which predicted huge gains as telecoms systems were expanded and upgraded.
Following the collapse of the dot.com bubble, Marconi was left unable to pay debts run up during an ambitious international expansion programme in the late 1990s.
Investment nightmare
Leaked details of the financial restructuring, sent Marconi shares down by 30% to 2.5p on Friday.
Investors have already watched the value of their savings shrink from a high of 1,240p in September 2000.
Marconi warned in June that the survival package being thrashed out with banks and bondholders would lead to a "very substantial dilution in value for existing equity holders".
But the lengths to which the company was willing to go to secure a deal had been unclear.
"Negotiations are ongoing with (Marconi's) syndicate lending banks and certain bondholders in respect of the group's financial restructuring," Marconi said in a statement issued on Friday.
"Further announcements will be made in due course," it added.
Deal details
Press reports suggest that the survival deal under negotiation will see banks and bondholders cancel Marconi debts in return for shares in the firm.
A syndicate of 31 banks is expected to write off about £1bn of £2.3bn owed.
The so-called "debt for equity" rescue plan is also being used by bankrupt cable firm NTL in its ongoing restructuring.
City sources say Marconi turned down the chance to extend its borrowing until 2005 in return for higher interest rates last Autumn.
Now, it has little option but to cede control of the company.
Marconi has 7,000 employees in the UK, and manufacturing operations in 16 countries. |
