Marconi shareholders may get 1%

THE worst fears of Marconi shareholders look like being realised as banks and bondholders hammer out the details of a refinancing package for the troubled telecoms equipment giant.

Under the terms creditors are now discussing those who convert their loans into shares could obtain up to 99% of the enlarged Marconi equity. That would leave present shareholders with as little as 1%.

These indications have emerged following a meeting on Tuesday attended by major creditors. Sources close to the talks said the final terms of the rescue package have yet to be decided.

But present shareholders should be braced for terms that would leave them between zero and 3% of the new share capital. If the figure fell to zero they would be offered warrants which could be of value if the new business traded well.

But it will be a bitter pill for investors who have seen their shares already plunge from a peak of £12.50 to 3.6p after the disastrous expansion led by Lord Simpson.

Details of the rescue may be finalised in the next few days. It will go to a vote of creditors but not necessarily of Marconi shareholders.

Because the group's illstarred expansion left it with crippling debts, creditors now have the upper hand. Some 31 banks owed £2.3bn between them are expected to write off £1bn before converting the rest of the debt into shares.