Marconi Plc has finally clinched the deal that it sketched out in August to hand 99.5% of its equity to its creditors and it expects to finally emerge from a humiliating reorganization before the end of its financial year on March 31, 2003.
In a deal delayed by continual haggling with creditors, Marconi has been forced to accept higher interest charges and deeper cuts as the price of being freed from a 2.8bn pounds ($4.4bn) debt burden.
Dealing with bankers however is child’s play compared to coping with the downturn in the market for telecoms equipment. In the six months to September 30, the firm’s net loss was 730m pounds ($1.2bn), down from a loss of $5bn ($7.9bn) on revenue down 54.8% to 1bn pounds ($1.59bn).
Marconi now plans to bring the workforce in its core business to down to 14,000, compared with its original target of 15,000 though the company hopes that natural wastage will bring about the lower figure.
The target is to get costs down to 450m pounds ($715.5m) its the next financial year, compared with the previous target of 520m pounds ($826.8m).
CEO Mike Parton had little optimism about market conditions. We are not expecting any upturn. We are expecting the market to remain tough. While Italy has shown some resilience and it had hopes of eventually profiting from BT Group Plc’s broadband push, there was no joy in the US where the RBOCs were still reining back spending.