Marconi's attempts to refinance its way out of trouble have collapsed after it had to abandon plans to restructure a £5.2bn overdraft facility.
The company had already used around £3bn of the money, but the banks rejected a deal and cancelled the remainder of the debt facility.
An added blow is that the debt now has to be paid back on demand, meaning that the banks can call in the outstanding amount at any time.
But such a drastic measure is unlikely, as the banks would have to compete with bond holders for the firm's assets.
Marconi paid interest on its Yankee loans earlier this year, but another interest payment of £56.7m for a Eurobond is due this week.
The company said last week that sales would be weak through to March 2003, but that it has access to £1bn in cash and is confident it will pay the interest.
Some of the firm's bond holders are angered by the collapse in the bonds' value and want to be involved in talks between Marconi and its bankers.
The company is likely to go for a debt-for-equity swap, a move that will anger bond holders.
Shares plunged during the week, and Standard & Poor's downgraded Marconi's credit rating from B to B minus.
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