Long awaited financial overhaul for Marconi

Stricken telecoms firm Marconi today unveiled a long-awaited overhaul of its finances that will leave shareholders with a mere 0.5% stake in the business.

After months of talks, Marconi has secured a debt-for-equity swap that will shift control of the group to its banks and bondholders.

Marconi ran up billions of pounds of debts after going on an acquisition spree at the height of the telecoms boom.

That meant the downturn hit hard, forcing Marconi to slash thousands of jobs and sell off non-core businesses as it struggled to cope with a collapse in demand.

Chief executive Mike Parton said: “The financial restructuring will allow the group to emerge with a balance sheet that we believe is robust and appropriate to the size of the business.

“We have worked hard to refocus the business and reduce costs in response to the severe market downturn experienced across the telecom equipment sector.

“The financial restructuring allows us to plan our future with renewed confidence.”

But it also means that shareholders’ investments will be rendered nearly worthless."

Mr Parton conceded it was a tough deal for shareholders.

“I don’t think anybody expects equity holders will be delighted by this but it’s just a sad thing that has happened.

“It also reflects the economic reality of where the company is now.”

The banks and bondholders will receive a combination of cash, new debt and equities on a pro-rata basis.