Marconi lays out restructuring plan - News Flash - Brief Article

Electronic News, Sept 2, 2002 by Suzanne Deffree

TROUBLED TELECOMMUNICATIONS COMPANY MARCONI plc last week laid out its financial restructuring plans, which set out the principles for Marconi and its wholly owned subsidiary Marconi Corp. plc.

Key to the efforts will be Marconi Corp.'s liquidation on a solvent basis to become a new holding group of the company.

Specifically, Marconi is looking to maximize cash recovery to creditors by cutting the company's $6.2 billion (4 billion British pounds) debt and paying out $403 million (260 million pounds), while allowing stockholders to keep their interests with the creation of a new set of bonds worth about $1.4 billion (900 million pounds). A controlling stake in the company will go to banks and bondholders.

Shareholders will own 0.5 percent of the new holding company and will be offered a new set of shares for an extra 5 percent of the company four years after the deal, which currently is set for January, is completed.

"The financial restructuring will allow the group to emerge with a balance sheet that we believe is robust and appropriate to the size of our business," said Mike Parton, Marconi's CEO, in a statement. "The level of cash and non-core assets retained by the group allow us to withstand a prolonged market downturn."

Once the restructuring is complete, Marconi said it expects to have about $983 million (635 million pounds) in cash, including about $496 million (320 million pounds) in restricted cash. The restructured Marconi intends to focus on optical networks.