OCT 01] MARCONI NEWS
Marconi On The Brink
moved even closer to stock market annihilation on Monday as its
shares plummeted another 25% to a low of 13.5p.
filing of a statutory report, a Form 20-F, to the Securities and
Exchange Commission in the USA, sent the share price into
tailspin as the market absorbed the doom-laden content of the
report grimly warns that the terrorist attacks in the USA have
made the company's bad financial situation even worse:
our September 4 trading update was published, events arising
from the tragic terrorist destruction of the WTC and the
Pentagon on September 11 have increased the general
uncertainty in our markets and there can be no assurance that
the action we announced on September 4 will be sufficient to
offset the decline in group sales or that we will be able to
achieve our forecasts for the six months ended September 30,
trading position continues to decline, our financial condition
and results of operations would be detrimentally
are now few signs of hope for the former GEC conglomerate.
company was dropped last week from the FTSE 100 list of the top
100 UK companies valued by market capitalisation. The current
share price now values the company at under £370 million - at
its peak last year it was worth £30 billion.
has also recently had to suffer the financial indignity of
having its credit rating lowered by S & P and Moody's. This
latest company filing to the SEC warns that the credit rating
may be reduced even further. This will make attracting any
further financing for the firm much more difficult and more
at 31 August 2001 Marconi had debts of £4.4 billion. At the end
of May the company entered into a 3 billion Euro revolving
credit facility with a syndicate of banks.
is no indication yet that the banks are getting nervous about
the borrowing. However this credit agreement, and another 4.5
billion Euro facility from 1998, both have clauses that state
is an event of default if there has been a material adverse
change in the financial condition of the Group taken as a
whole since the date of the latest annual accounts delivered
to the agent of the such facility which has had or will have a
material adverse effect on the ability of Marconi plc to
comply with its payment obligations under the facility."
there be cause for the banks to invoke this clause they could
demand rapid, or even immediate, repayment of loans under these
would likely have dire consequences. The report to the SEC
liquidity and financial stability could be detrimentally
affected if we were unable to access our syndicated credit
is also facing an inquiry by the UK Listing Authority into
events leading up to the suspension of trading in Marconi plc's
shares on the London Stock Exchange on 4 July 2001 and Marconi
plc's trading updates of 4 July and 4 September 2001. If the
UKLA determines that Marconi has breached the rules it may issue
a public censure.
in Marconi was further dented last week when leading city
analysts Dresdner Kleinwort Wasserstein issued a research note
that suggested that Marconi's shares are now in effect
worthless, with a value of zero to 10p.
now looks as if the beleagured company's shares are rapidly
heading in that downway direction.
city broker concluded in its research note that:
is unlikely to survive unless a rescue package is provided by
a strategic backer or a hostile buyer in the imminent
in the year it was rumoured that Cisco were poised to takeover
much heralded £200m development at Ansty, just to the north of
Coventry, now seems a very dim prospect.
the future prospects for the 2,000 employees of Marconi
Communications in Coventry do not look good.
eyes will be on a trading update due on Monday 15 October.
next couple of weeks for the company may be decisive.
ALSO : [04 SEP 01] MORE
DOOM FOR MARCONI
SEE ALSO : [03 JUN 01] CISCO
POISED FOR MARCONI TAKEOVER
SEE ALSO : [10 APR 01] MARCONI
JOB CUTS HIT COVENTRY