Network infrastructure firm Marconi has made its shareholders happy by saying it is close to a debt restructuring deal that will leave investors holding shares that are practically worthless.
Over £4bn in debt, Marconi's stock has crashed to just a few pence a share. The firm warned the stock exchange this morning that "the re-capitalisation process is likely to involve a debt for equity swap for a significant proportion of Marconi's £4.3bn of gross financial indebtedness".
The company added that the board expected this to "lead to a very substantial dilution in value for existing equity holders".
The firm also said it expected to receive a notice in the coming weeks from Nasdaq that it is to be de-listed from the American Depositary Receipt (ADR) market, in accordance with Nasdaq rules relating to minimum ADR price requirements. It reported a £5.7bn pre-tax annual loss last month.
Mike Parton, Marconi's chief executive, said: "We continue our discussions as a part of a controlled process, to effect the recapitalisation of Marconi's balance sheet at the earliest opportunity.
"We are confident that our banks and bondholders will continue to be supportive during the process and that Marconi will emerge from this process with a significantly improved balance sheet."
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