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EDITIONS
Thursday, 20 June, 2002, 12:16 GMT 13:16 UK
Marconi investors dealt double blow
Marconi logo
Fallen telecoms giant Marconi has dealt shareholders a double whammy - warning that their holdings will be all but wiped out, and that the stock will no longer be traded on the Nasdaq stock market.

Marconi said it expected to receive a notice "in the coming weeks" that its shares have fallen below value requirements needed to remain traded on the US-based Nasdaq exchange.

"[The] shares will be delisted in accordance with Nasdaq rules relating to minimum... price requirements," Marconi said.

And the company said that a rescue plan being discussed with banks and bondholders would see the issuing of millions of new shares, a move which threatens to undermine the price of existing stock.

"The board expects [the deal] will lead to a very substantial dilution in value for existing equity holders," a statement said.

Marconi shares plunged 20% in early trade on Thursday, before recovering some ground by lunchtime.

Banks 'supportive'

The dilution would pile further grief onto shareholders who have already seen the value of their shares fall from more than 12 in September 2000 to 5.7p at Wednesday's close.

"Marconi's statement showed there is nothing much in it for existing shareholders," Michael Blogg, telecoms analysts at ING, said.

But a rescue deal would prevent the firm collapsing altogether under a 4.3bn debt mountain.

"We are confident that our banks and bondholders will continue to be supportive during the process Marconi will emerge from this process with a significantly improved balance sheet," chief executive Mike Parton said.

Shares slide

The share dilution would come as Marconi bondholders agreed to swap their investments for fresh stock issued by the once-mighty telecoms equipment maker.

Such a so-called "debt for equity" swap, similar to the deal negotiated by NTL in its restructuring, would cut Marconi's interest payment bill and support its credit rating.

But it would split the value of the firm between more shareholders, hitting the value of each individual share.

Marconi stock stood down 0.85p, or 14.9%, at 4.85p at 1215 GMT.



Analysis
See also:

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