Marconi – best known over the past few years for its ability to lose bucket loads of cash – is now debt free, the company has announced.
The communications technology group said it has paid off the £670m of debt it assumed in May 2003 as part of the emergency financial restructuring that saved it from oblivion.
Marconi ran up billions of pounds’ worth of liabilities when the technology bubble of the late 1990s burst, forcing the company on to the mercy of its creditors and leaving its former shareholders with little to show for their investment.
The company said cash raised from the sale of non-core assets and an improved performance in its key markets had allowed it to pay back the money four years early.
Marconi raised £221m from its latest disposal, the sale of its Outside Plant & Power (OPP) business to US engineering giant Emerson. The UK group said OPP was the last of the businesses earmarked for sale as peripheral to its future ambitions in the telecoms networking industry.
The debt eradication exercise will save Marconi £56m a year in interest charges alone, said chief executive Mike Parton. ‘The early pay-down of all our restructuring debt is an excellent achievement,’ he said. ‘We have emerged with a strong balance sheet and can now focus fully on growing our business.’
The debt repayment announcement was a further boost to the revived Marconi, coming just days after it unveiled a deal designed to help it make inroads into China. The UK group has signed a mutual distribution agreement with ZTE, which claims to be China’s leading telecoms equipment manufacturer.
The deal will initially focus on the Marconi Digital Radio System (MDRS), the company’s wireless communications system. According to Marconi, MDRS can provide high-capacity radio links in areas where it is impractical to lay cables.
In return for distributing the Marconi system to its massive network of customers, ZTE will gain access to the UK group’s European markets for some of its own communications technology.
Marconi and ZTE hailed the deal as an example of how companies that are ostensibly in competition could pool their technical expertise, and help each other gain a foothold in new geographical markets. Both partners said further systems could be added later to the mutual distribution deal.