Advisers to share £50m in fees from Marconi rescue deal

As Marconi yesterday remained locked in negotiations with lenders and bondholders over the company's future, it emerged that the major winners from the restructuring of the troubled telecoms equipment maker will most likely be the advisers to the various parties involved.

Financial sources close to the negotiations said the lawyers, business consultants, investment bankers and accountants on the deal will end up sharing £50m in fees. This is around the same value as the stock market places on Marconi's entire equity capital.

The money will come out of Marconi coffers as part of an agreement which will see the group pay the fees not just of its advisers but also for those negotiating on behalf of lending banks and bondholders.

A syndicate of 27 banks, led by HSBC and Barclays, are owed £2.3bn by Marconi while bondholders are looking to get something back from the £1.7bn they lent the group.

Among those expected to get a slice of the £50m are the US law firm Bingham Dana and the financial advisers Greenhill, who are representing bondholders. The investment bank Lazard & Co, which is acting for Marconi, will be another gainer.

In banking circles there had been talk that advisers on the refinancing of Marconi could end up with up to £100m.

However, even these figures looks quite modest compared to the $500m (£329m) reported to have been paid to advisers working on the recent restructuring of the cable giant NTL.

Investors had been expecting the Marconi restructuring to have been unveiled by yesterday. There is not much hope that existing shareholders will be able to salvage much value from their investment with analysts predicting that they are unlikely to end up with more than 1 per cent of the enlarged company.

The lending banks will also most probably end up out of pocket and they will be hoping that the cost of advisers can be kept to a minimum. After all, it is they who will be holding the biggest chunk of Marconi once the group is refinanced.

Marconi made the mistake of investing heavily in telecoms equipment businesses during the technology boom while opting to sell off its highly profitable defence businesses to BAE Systems.

The fact that Marconi paid cash for these businesses, some of it borrowed, made the investment even more regrettable once the technology bubble burst and demand for telecoms equipment melted.