A syndicate of banks and bondholders have been negotiating a restructuring deal since May and now look likely to take control of the troubled telecoms equipment maker, with current shareholders being offered just 0.5% of the company’s stock between them, and the option to buy more shares.
‘As stated previously, the restructuring process is likely to involve a debt for equity swap for a significant proportion of Marconi’s indebtedness,’ the company said in a statement.
‘It is currently envisaged that existing holders of Marconi ordinary shares would receive 0.5 per cent of the share capital immediately following the restructuring together with warrants allowing the purchase of five per cent of the issued share capital, subject to certain criteria.’
After topping 1240p in September 2000, Marconi shares have plummeted to less than 2p.
Marconi said that the restructuring was designed to ‘provide flexibility for its ongoing success, maximise cash and overall recovery for creditors and allow existing shareholders to maintain an ongoing economic interest in the Group.’
The company, over £4bn in debt, hopes to reduce net debts to around £300m. It is thought to have between £500m and £600m in cash, at least half of which is needed to keep the company running with the rest set aside for security against existing liabilities.
More details of the firm’s business plans are expected soon. This is expected to include more job cuts, less product lines and a reduction in the number of markets the firm operates in.
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