Marconi repays debts early after restructuring

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The Independent Online

Marconi has repaid its debts early, the company announced, in a move that saw creditors receive some 50 per cent of the money owed following the cash crisis at the telecoms equipment group.

Marconi has repaid its debts early, the company announced, in a move that saw creditors receive some 50 per cent of the money owed following the cash crisis at the telecoms equipment group.

Shareholders, by contrast, were almost completely wiped out under the terms of the company's restructuring in 2002. Marconi had declared that it could not afford to service the over £4bn of debts it had then.

As part of the restructuring, which saw creditors take 99.5 per cent of the company's equity, debt was reduced to $1.2bn, while creditors also received £360m in cash. Early this year, $487m (£272m) of the debt was repaid and the company said yesterday that the remainder - due for repayment by 2008 - had now been met.

Mike Parton, the chief executive, said: "The re-emergence of Marconi has been completed with the repayment of the last of the debt that we took on as part of our restructuring. An anticipated annual interest charge of over $100m per annum has been eliminated through the prompt repayment of the debt."

Counting the equity received by the creditors, as well as the cash and the debt repayment, it is estimated that the creditors have now received around 50p in the pound for their debt.

Mr Parton added: "We have emerged with a strong balance sheet and can now focus our efforts on growing our business."

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