Marconi launches search for new chairman

Marconi has launched a search for a new chairman to replace Derek Bonham, who will quit after he has overseen the company's financial restructuring.

The beleaguered hi-tech company is expected to complete a debt-for-equity deal later this year that will leave its banks, which include HSBC and Barclays, with more than 50 per cent of the equity.

Mr Bonham, who took over the reins of chairman after finding himself as the most senior director after a management purge last year, has indicated he wants to leave.

In a statement Marconi said: "When the financial restructuring is completed Derek Bonham will have completed his task for Marconi.

"Derek Bonham and [non-executive director] Allen Thomas have already started the search for a new chairman."

It is understood that the search for a new chairman has only just begun and there are no clues as to what sort of calibre of executive the company is seeking.

However company sources were anxious to dispel rumours that Mike Parton, the managing director, or Steve Hare, the finance director, would quit.

Mr Bonham, the 60-year-old former boss of Hanson, the industrial conglomerate, is also a non-executive director of Imperial Tobacco and the drugs group GlaxoSmithKline.

The company has been staving off bankruptcy since it fell into chaos after sales collapsed forcing it to fire thousands of staff. It has £4.3bn of debt including bank borrowings of about £2.2bn.

At the end of April, it said it had ring-fenced about £850m of its then £1.4bn cash pile, which is sitting in a safe bank account and which will go toward the restructuring.

Marconi amassed its huge debt mountain when its former bosses John Mayo and Lord Simpson embarked on a multibillion-pound spending spree to turn GEC, a traditional industrial conglomerate into Marconi, a New Economy player.

In a bid to reduce the size of the debt, the new management has been selling off-core divisions that play no part in its core activity to supply equipment for high-speed data networks.

Last Friday it agreed to the £400m sale of its Italian communications business to Finmeccanica, the Italian defence giant.

Once valued at £12 a share, Marconi stock now trades at just 3p. Shareholders will receive almost nothing under the terms of the debt-for-equity swap.

After the deal with the banks has been agreed, bondholders who have bought Marconi debt in return for annual coupon payments, will own the remainder of the company.

They are owed about £2bn and are on an equal footing with the banks in terms of creditor status.