SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the Month of February 7 2003
Commission file number: 0-30924
MARCONI PLC
(Exact name of Registrant as specified in its Charter)
4th Floor
Regents Place
338 Euston Road
London
NW1 3BT
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange
Act of 1934.)
Yes No X
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In order to utilize the "Safe Harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995 (the "Reform Act"), Marconi plc ( the
"Company") is providing the following cautionary statement. Except for
historical information contained herein, statements contained in this Report on
Form 6-K may constitute "forward-looking statements" within the meaning of the
Reform Act. The words "believe", "anticipate", "expect", "intend", "estimate",
"plan", "assume", "positioned", "will", "may", "risk" and other similar
expressions which are predictions of or indicate future events and future trends
which do not relate to historical matters identify forward-looking statements.
Reliance should not be placed on such statements because they involve known and
unknown risks, uncertainties and other factors which are in some cases beyond
the control of the Company, together with its subsidiaries (the "Group"), and
may cause the actual results, performance or achievements of the Group to differ
materially from anticipated future results, performance or achievements
expressed or implied by such forward-looking statements (and from past results,
performance or achievement). Certain factors that may cause such differences
include but are not limited to the following: (1) any major disruption in
production at our key facilities; (2) changes in the environmental, tax and
other laws and regulations, which, among other things, could cause us to incur
substantial additional capital expenditures and operation and maintenance costs;
and (3) adverse changes in the markets for our products, including as a result
of increased competition in the highly competitive international markets for
such products. These and other risks, uncertainties and factors are discussed in
the Company's Registration Statement on Form F-1 and other filings with the
Securities and Exchange Commission, including this Form 6-K. Shareholders and
prospective investors are cautioned not to place undue reliance on these
forward-looking statements which speak only as to the Company's judgment as of
the date hereof. Any such forward-looking statements are not intended to give
any assurance as to future results. The Company undertakes no obligation to
publicly update or revise any of these forward-looking statements, whether to
reflect new information or future events or circumstances or otherwise.
MARCONI PLC
RESTRUCTURING UPDATE
Update on Initial Cash Distribution and Agreement in Principle for Settlement of
ESOP Derivative Arrangements with Barclays Bank plc, Salomon Brothers
International Limited and UBS AG
- GBP35 million settlement agreed in principle with Barclays Bank plc, Salomon
Brothers International Limited and UBS AG in relation to potential claims
under ESOP derivative arrangements, subject to relevant creditor approval
and the Marconi Corporation Scheme of Arrangement becoming effective
- Resultant "Day one" redemption of approximately GBP135 million (at 110 per
cent of par value), of the Junior Notes (to be issued as part of the
Restructuring), reducing the Junior Notes by approximately GBP123 million
- Marconi Corporation is seeking to make an additional GBP20 million initial
cash distribution in replacement for the surplus cash element of the excess
cash mechanism outlined in the amended non-binding heads of terms
announcement in December 2002
- Proposed initial cash distribution therefore to increase from GBP165 million
to GBP320 million (including GBP135 million "Day one" redemption of the
Junior Notes) in addition to GBP95 million of interest accrued to 15 October
2002 and already paid to financial creditors
London - 7th February 2003 - Marconi (MONI) today announces a significant
development towards completion of the financial restructuring (the
"Restructuring") of Marconi plc and its wholly owned subsidiary Marconi
Corporation plc ("Marconi Corporation").
The Group is pleased to announce that it has reached agreement in principle with
Barclays Bank plc, Salomon Brothers International Limited and UBS AG (the "ESOP
Derivative Providers"), for a settlement of all potential claims made against
Marconi plc and other Group companies relating to the previously disclosed ESOP
derivative arrangements entered into during calendar year 2000.
Under the terms of the in principle settlement arrangements, which are subject
to definitive documentation and are conditional upon the Marconi Corporation
scheme of arrangement becoming effective and the consent of the requisite
majorities of both the Syndicate Banks and the ad hoc committee of bondholders,
Marconi Corporation will pay GBP35 million together with costs to the ESOP
Derivative Providers in full and final settlement of all their ESOP related
claims against the Marconi Group.
Payment to the ESOP Derivative Providers will be made from the previously
disclosed cash retention of up to GBP170 million which was to be set aside by
Marconi Corporation as part of the Restructuring pending resolution of potential
liabilities of Group companies in relation to the Group's ESOP hedging
arrangements. The balance of approximately GBP135 million will be used upon
completion of the Restructuring to redeem (in part) the Junior Notes at 110 per
cent of face value. This will reduce the value of the Junior Notes by
approximately GBP123 million. Marconi is expecting to have discussions with
relevant creditor groups regarding the potential impact the ESOP settlement may
have on the future capital structure of the Group.
The Boards of Marconi plc and Marconi Corporation believe that the settlement
agreed in principle with the ESOP Derivative Providers will have a positive
impact on the overall Restructuring process and is in the best interests of
Marconi plc, Marconi Corporation and their respective stakeholders as a whole.
In reaching this conclusion, the Boards of Marconi plc and Marconi Corporation
have taken into account a number of factors, including the merits of the claims
of the ESOP Derivative Providers, the desire to reduce the cost and expense of
continuing litigation, the potential saving in the interest burden from which
the Group will benefit by settling at this stage (through the "Day one"
reduction in the Junior Notes) and the benefits for the Schemes and certainty of
the "Day one" distribution that such a settlement will bring.
In addition to the ESOP settlement and the resulting reduction in the amount of
the Junior Notes, Marconi Corporation is also seeking to make an additional
GBP20 million payment in the initial amount of the cash to be distributed to
Scheme creditors upon completion of the Restructuring which will not result in a
reduction of the Junior Notes. This would replace the surplus cash element of
the excess cash mechanism outlined in the Group's announcement of 16 December
2002. These arrangements are subject to the approval of the relevant creditor
groups.
The settlement with the ESOP Derivative Providers and their consequential
exclusion as scheme creditors in the Marconi plc scheme of arrangement will
reduce the level of total claims at Marconi plc. This reduction, combined with
the results of further due diligence that has been conducted on the liabilities
at Marconi Corporation and Marconi plc means that the current level of
identified actual and contingent claims are estimated to be approximately GBP5.1
billion and GBP4.9 billion respectively. In addition, the ongoing Scheme costs
of Marconi plc are to be borne by Marconi plc out of its own resources and from
any Scheme consideration it receives from Marconi Corporation. Work is currently
ongoing to quantify this amount, which is expected to be in the range of GBP5
million to GBP15 million. More precise details will be provided in the Marconi
plc Scheme documentation.
The Boards of Marconi plc and Marconi Corporation are currently considering the
impact of these matters on the timetable for implementation of the
Restructuring, but believe that posting of the Scheme documentation in
connection with the Restructuring will still occur before the end of Marconi's
financial year (March 2003).
ENDS/...
Notes to Editors
Background to ESOP Arrangements
As previously disclosed, Marconi plc issued share options to Group employees
under a number of different employee share option plans. In order to hedge the
potential cost of acquiring shares in order to satisfy the Group's obligation
under such plans, the trustee of the Marconi Group share option scheme entered
into contracts (ESOP derivative transactions) guaranteed by Marconi plc to
purchase shares in the future at prices which were fixed at the date of the
contract.
It had previously been expected that, as part of the Restructuring, a total of
up to GBP170 million was to be set aside pending determination of any claims
which the ESOP Derivative Providers may have had against Marconi Group
companies. The ESOP arrangements provided for monies to be set aside for the
benefit of the participating ESOP Derivative Providers only to the extent that
it was subsequently found by a court, or agreed between the relevant parties,
that the participating ESOP Derivative Providers would have been able to recover
amounts from Marconi plc and existing and past subsidiaries of Marconi under
existing inter company funding arrangements relating to the Group's prior ESOP
hedging arrangements.
The ESOP arrangements did not have the effect of favouring claims which the ESOP
Derivative Providers might otherwise have had against Marconi under existing
guarantees given by it in favour of the ESOP Derivative Providers. Rather, the
ESOP arrangements implemented a mechanism to resolve uncertainties as to whether
and to what extent Marconi, Marconi Corporation, the trustee of the Marconi
Group share option scheme or the participating ESOP Derivative Providers had
claims against operating and other companies within the Marconi Group. Such
companies were or are under the ownership of Marconi Corporation and,
structurally, any such claims of the ESOP Derivative Providers, if determined to
be valid, may have ranked ahead of claims against Marconi Corporation.
Implementation of the prospective settlement with the ESOP Derivative Providers
will require these arrangements to be amended.
About Marconi plc
Marconi plc is a global telecommunications equipment and solutions company
headquartered in London. The company's core business is the provision of
innovative and reliable optical networks, broadband routing and switching and
broadband access technologies and services. The company's customer base includes
many of the world's largest telecommunications operators.
The company is listed on the London Stock Exchange under the symbol MONI.
Additional information about Marconi can be found at www.marconi.com.
Copyright (c) 2002 Marconi plc. All rights reserved. All brands or product names
are trademarks of their respective holders.
Contacts
Name: David Beck / Joe Kelly Heather Green
Title: Public Relations Investor Relations
Phone: +44 (0) 207 306 1771 +44 (0) 207 306 1735
+44 (0) 207 306 1490
joe.kelly@marconi.com heather.green@marconi.com
Cautionary statement regarding forward-looking statements
In order to utilize the "Safe Harbor" provision of the U.S. Private Securities
Litigation Reform Act of 1995, Marconi plc ("the Company") is providing the
following cautionary statement. Except for reported financial results or other
historical information, certain statements in this press release are
forward-looking statements, including, but not limited to, statements that are
predictions of or indicate future events, trends, plans or objectives. Reliance
should not be placed on such statements because, by their nature, they are
subject to known and unknown risks and uncertainties and can be affected by
other factors which are beyond the control of the Company and its subsidiaries,
and may cause actual results, performance and achievements to differ materially
from anticipated future results, performance and achievements expressed or
implied in the forward-looking statements (and from the past results,
performance or achievement). Although not exhaustive, the following factors
could cause such differences: any major disruption in production at our key
facilities; changes in the environmental, tax and other laws and regulations,
which, among other things, could cause us to incur substantial additional
capital expenditures and operation and maintenance costs; and adverse changes in
the markets for our products, including as a result of increased competition in
the highly competitive international markets for such products. These factors
and other factors that could effect these forward-looking statements are
described in the Company's Form 20-F report and Form 6-K reports filed with the
U.S. Securities and Exchange Commission. The Company disclaims any obligation to
publicly update or revise these forward-looking statements, whether to reflect
new information or future events or circumstances or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARCONI PLC
By: ____M Skelly____
Name: M Skelly
Title: Secretary
Date:February 7 2003