The telecoms equipment maker Marconi yesterday sold nearly half its holding in the internet company Easynet for £40.5m -- the bulk of which will go toward paying off the company's debt.
Marconi, which ended up with a 72 per cent stake in Easynet after it folded one of its divisions into the broadband business, has cut its holding to 40 per cent.
Under the terms of its recent refinancing deal, Marconi is only allowed to keep the first £82m of money that it gets in from selling off businesses and assets.
Since it had already accumulated a £79m cash pile from disposal proceeds, it can only keep £3m of the total cash it got from sellingits Easynet shares. The balance of that money has to go into a special safe account to pay off debt.
Marconi yesterday sold 36.1 million shares in Easynet to institutions for 112p each. Shares in Easynet closed down five per cent, or 6p, at 116.5p last night.
Mike Parton, Marconi's chief executive, said: "The reduction of our Easynet stake is consistent with our practice of managing non-core assets for value. For Marconi, this is a welcome contribution to reducing our gross debt."
While shares in Easynet have rallied hard from their 60p low, reached last September, the stock is still well beneath the £5 level it was trading at when Marconi first became a shareholder in the company in June of 2001.
Marconi is left with 44.7 million shares in Easynet -- equivalent to a stake of around 40 per cent, worth about £52m. A spokesman for the company would not comment yesterday on whether Marconi planned to cut its Easynet further still. "No decision has been taken. We'll manage it [the stake] for value," he said.
The company also said that the £40.5m of shares placed with institutional investors had a carrying value of £12.8m in Marconi's accounts.
"The placing of the stock with institutions will improve the liquidity in Easynet shares and allow the business to move forward with a more balanced shareholder base," Mr Parton said.Reuse content