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Financial

Financing Rumors Mar Marconi

Shares of Marconi PLC (Nasdaq/London: MONI) kept falling Monday morning, as the telecom equipment maker searches for a way to get out from under its $3 billion debt without declaring bankruptcy or allowing its debtors to break up the company.

There has been wide speculation that the company is proposing a debt-for-equity swap, in which bondholders would swap the money they're owed for a stake in Marconi. Marconi spokesman Jim Blew says nothing of that sort has been officially announced.

The only thing Marconi has said publicly on the matter is that it is working on presenting the banks with a revised business plan and more refinancing options (see Marconi Gives Trading Update). Last month, Marconi's shares took a huge dive when the company rejected a refinancing agreement that had been several months in the making (see Marconi Tanks Big Time). "We do not intend to declare bankruptcy," Blew says. "But until we get things sorted out with the bankers, there will be a certain amount of volatility in our share price."

If Marconi fails to devise a plan the banks can support, its creditors would have the option of breaking up the company and selling the pieces in order to recover some of their investment. However, many on Wall Street aren't convinced that things will go that far.

"It's in the bank's best interest for Marconi to survive," says a source familiar with the situation, who spoke on condition of anonymity. "The banks realize that if they break up Marconi, they'll only get pennies on the dollar for its pieces in the current market."

Marconi shares were down $0.02 (9.36%) to $0.18 in late morning trading on Monday. The company's market capitalization is $252.2 million, which means it is now closer in value to a small, single-product company such as Tellium Inc. (Nasdaq: TELM) than to its peers of comparable size.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
FiberGuy 12/4/2012 | 10:38:38 PM
re: Financing Rumors Mar Marconi Although the whole situation is frightening... the last paragraph sent a chill down my spine. Tellium?

Lord Simpson must be laughinghis way to the bank, while Guglielmo must be rolling in his grave for having his name dragged through the mud.
hmarcy 12/4/2012 | 10:38:31 PM
re: Financing Rumors Mar Marconi I think this might be a plan to right a book on all the ways you could mismanage a company in the least amount of time.
lu-alum 12/4/2012 | 10:38:27 PM
re: Financing Rumors Mar Marconi I agree. It's funny, just a few years ago no one knew who GE PLC or Marconi were. Then they make a couple of acuisitions of "also-ran" companies like Fore and Reltec and surprise, they don't turn it into the next Cisco. This is natural selection. Right now the Marconi folks are about to be "selected" for the dole queue.
FiberGuy 12/4/2012 | 10:38:24 PM
re: Financing Rumors Mar Marconi Other than for a slight European edge on SDH, why would any company look to buy MONI? Any ideas?
eltdg 12/4/2012 | 10:38:11 PM
re: Financing Rumors Mar Marconi lu-alum said:
"I agree. It's funny, just a few years ago no one knew who GE PLC or Marconi were. Then they make a couple of acuisitions of "also-ran" companies like Fore and Reltec and surprise, they don't turn it into the next Cisco. This is natural selection. Right now the Marconi folks are about to be "selected" for the dole queue."

Well, some did actually, but not in the telecom market. That was before they decided to focus on their telecom activities... I guess than from this point of view, a comparison with Alcatel would be more appropriate, but I agree with you anyway.
netgenius 12/4/2012 | 10:38:06 PM
re: Financing Rumors Mar Marconi North America: 960G Core Router. With IP/MPLS/ATM. Fills in nicely the hole of the mysterious 8950. With 4 or 5 carrier wins they could pay for the whole frigging company.

Europe: With BT cutting people and Capex and focusing on broadband access (sounds familiar and it didn't work in NA for carriers)....and with the unionized workforce....I would not touch Europe with a 10 foot pole.

Just my 2 cents.
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