Marconi sells petrol pumps unit for £225m

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The Independent Online

The troubled telecoms equipment maker Marconi yesterday made further positive strides to chop debt by selling off another division while buying back some of its bonds.

The company said it had reached an agreement to sell Marconi Commerce Systems, its petrol pumps business, to Danaher of the US for $325m (£225m) cash. That deal, however, is still subject to regulatory approvals.

Separately, one of Marconi's lesser-known divisions, Ancrane, bought bonds worth some £150m in the market two days ago. Those bonds, however, have not yet been cancelled although the company is widely expected to eliminate them in the coming weeks.

Shares in Marconi finished down 7 per cent at 33.60p.

Analysts welcomed both moves but found particular comfort in the bond buyback, taking it as a signal that negotiations with the company's bankers over a refinancing were going well.

"They [Marconi] must have done it [the bond buyback] with the tacit agreement of the banks and on that basis the banks must be happy to renegotiate on some form or other. That would mean the refinancing is likely to go ahead which means it [Marconi] will survive," said one analyst who did not want to be named.

The company, which has been holding talks with its bankers over the past couple of months to renegotiate 7.5bn euros (£4.7bn) of loan facilities, said it hoped to have struck a deal by next March. While those talks are thought to have started well, they are still at an early stage.

Marconi said yesterday that it may buy back more bonds "from time to time" through either its Ancrane unit or other divisions and said Ancrane might "in due course" cancel the bonds it had just bought.

Analysts speculated, however, that the bonds could be sold back into the market as part of a refinancing.

The deal to sell the North Carolina-based Marconi Commerce Systems, meanwhile, is expected to be completed early next year. That business supplies fuel pumps as well as point of sale and accounting systems for the petrol market. In the six months to 30 September, it recorded an operating profit of £5m on sales of £183m.

Mike Parton, Marconi's chief executive, said the deal represented a "major milestone" in the company's ongoing programme to focus on its core communications business. It was also part of its plan to generate in excess of £500m of cash by March of next year in an effort to cut borrowings to £2.7bn to £3.2bn.