Troubled Marconi still on the slide

SHARES and bonds in troubled Marconi resumed their slide as brokers cut their ratings and the company rushed to deny reports that it was preparing to default on its traded debt.

Marconi, which on Friday admitted talks with its banks to reschedule its syndicated loans had broken down amid a worsening sales slump, denied that it was about to miss a combined e92m (£56.7m) payment that falls due on its two Eurobond issues this Saturday. Shares in the firm dipped a further 35%, losing 3.3p to 6.25p, as UBS Warburg cut its fair value on them to 5p from 30p.

A spokesman for Marconi, which earlier this month made a $72.5m (£50.88m) payment on an outstanding dollar- denominated Yankee bond, said it 'completely denied' reports that it was about to halt the payments.

The spokesman added: 'The Eurobond interest is due in the next few days and we will absolutely be making that payment and not defaulting on it.'

The market thinks that could be mixed news for the bondholders, who have equal creditor status with Marconi's banks. The firm said it had no current plans to meet bondholders, who have so far been excluded by debt restructuring talks.

Despite the denial, concerns about a possible default helped take the firm's e500m 2005 Eurobond down to just 30% of face value from a high of 33%, before clawing back to 31.30%. The firm's 2010 e1bn issue was trading at between 28% and 29% of its face value.