Troubled Marconi facing £5bn loss
TROUBLED telecoms equipment maker Marconi is expected this week to unveil the biggest half-year loss in the annals of British business. New chairman Derek Bonham will reveal that the group made a £5bn loss in the six months to the end of September.
Operating losses, before a slew of write-offs, are forecast to be around £350m.
The figures - due for release on Tuesday - follow a catastrophic profit warning in September, accompanied by the departures of former chief executive Lord Simpson and chairman Sir Roger Hurn.
Bonham will be trying to convince investors - who have seen the value of their holdings fall from 1250p to a low of 13p - that the worst is over. The shares start the week at 33 3/4p.
Bonham and chief executive Mike Parton have put together a recovery plan involving the loss of thousands of jobs. They pledge to raise £1bn by the end of March next year by selling non-core assets and by squeezing working capital.
The pair set a target of slashing debt from £4.4bn in September to between £2.7bn and £3.2bn by March 2002. Borrowings have already been cut to around £3.5bn, thanks mainly to the sale of the medical systems business to Philips for £780m. Marconi raised a further £140m through smaller disposals out of a targeted £500m.
The City credits Bonham and Parton with making a decent start. But they face difficulties in pushing through further sales at a good price in the current climate. Hopes that Marconi will realise up to £200m from its stake in internet group EasyNet are premature as it is locked in for 15 months.
The company is conducting meetings with its syndicate of 30 bankers, led by Barclays and HSBC, to renegotiate its long-term finances. If it fails to do so, it could become insolvent.
