UK telecoms equipment manufacturer Marconi has announced details of the refinancing deal, which it expects to save the company. The debt for equity swap deal will wipe out a large proportion Marconi’s debt, but see control of the company pass from shareholders to banks and bondholders. Existing shareholders will end up owning just 0.5% of the company after the deal is completed.
Following the refinancing deal Marconi will have debts of only £300 million compared to the £4 billion it currently owes its banks and bondholders. Existing shareholders will receive warrants giving them the right to buy an additional 5% of the firm, when Marconi’s market capitalisation has risen to £1.5 billion. The company expects to complete the deal by January 2003.
Marconi is also looking for a new chairman following the resignation of interim chairman Derek Bonham.