Marconi directors last night ridiculed claims by John Mayo, former chief executive-designate of the troubled telecoms equipment group, that they rejected a merger proposal which could have netted shareholders £25bn in cash.
They also rubbished assertions by Mr Mayo that Marconi's financial crisis was partly the responsibility of the man who eventually took over as chief executive, Mike Parton, pointing out that Mr Mayo himself had been finance director at the time the group's debt mountain began to soar alarmingly.
Mr Mayo's claim that Marconi was forced to pay £4bn in cash for two American internet equipment companies because it was not clean enough to list its shares in the US, was also treated sceptically.
The former Marconi executive, who has not worked since he was ousted last July with a £600,000 pay-off, claimed yesterday that his "biggest mistake" was to have failed to secure a cash takeover of the group by one of its larger US rivals.
Mr Mayo said that at a meeting of the board and key executives at a Sussex country house hotel in February, he unveiled a plan code-named "Superbowl Two". This involved starting an auction for Marconi among prospective bidders and then securing a merger partner prepared to pay a significant premium in cash.
However, Mr Mayo claims that his proposal was thrown out by fellow board members with one actually invoking Britain's wartime defiance, saying: "We didn't give up on the beaches of Dunkirk, and we are not going to give up now."
But Mr Mayo's account of how he was thwarted was rubbished by others. One Marconi source said: "It was never clear to us who John thought was going to come along and pay a big premium for the company, much less offer us cash. No one else in the industry was buying for cash then. They were all issuing paper on the way up."
Even one of Mr Mayo's allies expressed puzzlement at who he had had in mind. "John and George [Lord Simpson of Dunkeld, Marconi's former chief executive who also resigned in disgrace] were always talking about selling the company to Cisco. But it was never actually clear to me whether there was actually a buyer there," the individual said. "It was more a question of John going around trying to persuade another company to bid."
Marconi sources also poured scorn on Mr Mayo's insistence that he only paid cash for the acquisitions of Fore Systems and Reltec because Marconi was not compliant with the US Foreign Corrupt Practices Act and so could not list in the US. Mr Mayo said he had to spend time "cleaning up the company" so it could offer its shares to US investors.
But another Marconi source said: "We had not got around to a listing in the US only because Marconi was busy doing other things. Dealing with the issue of non-compliance would just have been a box-ticking matter, an exercise in good housekeeping. The fact is that John had got his hands on the cash and was desperate to spend it."
Allies and opponents of Mr Mayo were agreed on one thing, however – his insistence on Marconi being free of bank covenants, even though it meant paying higher interest on its £4bn of debts, had prevented the company's bankers from placing it in receivership. Mr Mayo says that one non-executive – understood to have been the former Reed Elsevier chairman Nigel Stapleton – had argued hard for Marconi to accept covenants but he resisted and "thankfully the board backed me".Reuse content