Marconi calls in debt guru

BELEAGUERED telecoms equipment group Marconi has appointed leading insolvency expert Talbot Hughes in a further sign that it plans to swap the bulk of its £4.26bn debt for shares.

Talbot Hughes specialises in such financial reconstruction and recently won a similar mandate to advise bondholders of the troubled business telecoms group Energis, which is struggling under a £1.2bn debt mountain.

Its principal John Talbot made his name in the Maxwell collapse as administrator to Robert Maxwell's private companies. A formal announcement is expected later this week.

Marconi ran into trouble by spending billions on telecoms equipment businesses at the height of the dotcom boom. At the time telecoms operators were spending vast amounts of money believing that the internet would lead to rocketing growth for years to come. When the demand did not materialise, Marconi's orders dried up.

Marconi showed last week just how badly it has suffered, unveiling an eyewatering £5.7bn annual loss and sales down by a third. It also warned it did not expect a recovery before next year.

It plans to float its defence communications business, but will still need more relief from its banks and bondholders currently owed £2.46bn and £1.8bn respectively.

A debt-for-share swap will wipe out shareholders, including Lord Weinstock, who built the forerunner of Marconi, GEC, into a £32bn giant over three decades. His stake was once worth £370m. Marconi closed on Friday down 1.6p to 7.5p valuing the group at £209m. It hit £12.50 two years ago.

Meanwhile, Marconi's management, including chief executive Mike Parton and chairman Derek Bonham, are expected to stay put until the restructuring is complete, in spite of earlier speculation they would leave. Bonham took the chair in September after the group's top three executives Sir Roger Hurn, Lord Simpson, and John Mayo were ousted.