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 March 31 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 AND MARCONI CORPORATION PLC
POSTING OF PROPOSED SCHEMES OF ARRANGEMENT FOR MARCONI PLC AND MARCONI
CORPORATION PLC
PUBLICATION OF PROSPECTUS BY MARCONI CORPORATION PLC
London, 31 March 2003 - On 18 March 2003 Marconi plc ("Marconi") announced that
it had filed with the High Court of Justice of England and Wales (the "Court")
proposals in relation to the proposed financial restructuring (the
"Restructuring") of Marconi and its wholly-owned subsidiary Marconi Corporation
plc ("Marconi Corporation").
Marconi today announces that the Court has ordered the convening of meetings of
all creditors of Marconi Corporation and Marconi (except, in each case, for
certain excluded creditors) ("Marconi Corporation Scheme Creditors" and "Marconi
Scheme Creditors" respectively) for 25 April 2003 to consider schemes of
arrangement under section 425 of the Companies Act 1985 between Marconi
Corporation and the Marconi Corporation Scheme Creditors (the "Marconi
Corporation Scheme") and between Marconi and the Marconi Scheme Creditors (the
"Marconi Scheme" and, together with the Marconi Corporation Scheme, the
"Schemes"). Marconi Corporation and Marconi are today posting a document (the
"Scheme Document"), together with claim forms and proxy forms, to Marconi
Corporation Scheme Creditors and Marconi Scheme Creditors convening such
meetings for that date and setting out the final terms of the Restructuring.
Marconi Corporation will also be publishing today a prospectus in connection
with its application to the UK Listing Authority (the "UKLA") for the securities
to be issued by it under the Restructuring to be admitted to the Official List
and to trading on the London Stock Exchange's market for listed securities (the
"Prospectus"). Marconi is also today writing to its shareholders in relation to
the Restructuring. The Restructuring is expected to become effective on or
around 19 May 2003 (the "Effective Date"). The Marconi Corporation Scheme is not
conditional on the Marconi Scheme becoming effective. The Marconi Scheme will
not become effective unless the Marconi Corporation Scheme becomes effective.
Summary of principal terms of the Restructuring
Marconi Corporation Scheme
The claims of Marconi Corporation Scheme Creditors as at 5.00 p.m. on 27 March
2003 will be compromised in consideration for a distribution (pro rata to their
admitted claims) of a package of cash, new senior notes, new junior notes and
new shares of Marconi Corporation. The liability of Marconi Corporation in
respect of those claims will be extinguished. Further details of the terms of
the new senior notes and the new junior notes are contained in the Scheme
Document and the Prospectus.
The Marconi Corporation Scheme provides that a first initial distribution of
Marconi Corporation Scheme consideration will take place on the Marconi
Corporation Scheme becoming effective. In summary, each Marconi Corporation
Scheme Creditor that participates in the first initial distribution will be
entitled to receive (assuming no increase in the cash element but that the
Marconi Scheme becomes effective on the same day as the Marconi Corporation
Scheme), for each GBP1,000,000 of admitted claim, an initial distribution of
approximately: GBP64,196 cash; GBP85,022 equivalent in aggregate principal
amount of new senior notes (which will be denominated in euro and/or US dollars,
subject to elections made in claim forms and account holder letters); GBP58,177
equivalent in aggregate principal amount of new junior notes (which will be
denominated in US dollars); and 187,993 new Marconi Corporation shares.
The Marconi Corporation Scheme requires the approval of Marconi Corporation
Scheme Creditors at the meeting convened for that purpose (the "Marconi
Corporation Scheme Meeting"); the sanction of the Court by an order (the
"Marconi Corporation Scheme Order"); and the sealing of that order and the
delivery of a copy of it for registration to the Registrar of Companies in
England and Wales (the "Registrar of Companies"). The Marconi Corporation Scheme
Order will not be delivered for registration unless and until:
a. Marconi Corporation has, following the passing of a unanimous Board
resolution to approve the same, provided confirmation in writing to the
prospective Supervisors (for the sole benefit of the prospective
Supervisors) prior to each of (i) the release of the interim security
granted by Marconi Corporation through its special purpose subsidiary
Highrose Limited, (ii) the Marconi Corporation Scheme Meeting, (iii) the
hearing to sanction the Marconi Corporation Scheme and (iv) the Effective
Date, to the effect that Marconi Corporation remains satisfied that the
reserves built into the Marconi Corporation Scheme are sufficient to meet
distributions due to be made to all Marconi Corporation Scheme Creditors and
that Marconi Corporation remains of the opinion that the statement as to the
Marconi Corporation group's working capital contained in the Scheme Document
remains valid;
b. the prospective Supervisors have provided confirmation in writing to Marconi
Corporation (for Marconi Corporation's sole benefit) on the day of, but
prior to, each of events (i) to (iv) in (a) above to the effect that they
have no reason to disagree with Marconi Corporation's view that the reserves
built into the Marconi Corporation Scheme are sufficient to meet
distributions due to be made to all Marconi Corporation Scheme Creditors;
c. a permanent injunction order is made in the US Bankruptcy Court in respect
of the Marconi Corporation Scheme; and
d. all conditions precedent (other than those relating to the Marconi
Corporation Scheme becoming effective) set out in Marconi Corporation's new
working capital and performance bonding facilities are satisfied or waived
by the facility agents.
If the Court makes the Marconi Corporation Scheme Order, Marconi Corporation
anticipates that the order of the US Bankruptcy Court will be granted. Marconi
Corporation will not pursue a permanent injunction order of the US Bankruptcy
Court unless the English Court makes the Marconi Corporation Scheme Order. If
all of the above conditions are not satisfied by 19 June 2003 the Marconi
Corporation Scheme will be withdrawn. Marconi Corporation will undertake to the
Court to file the Marconi Corporation Scheme Order with the Registrar of
Companies as soon as the conditions set out above are satisfied provided such
conditions are satisfied on or before 19 June 2003.
Marconi Scheme
The claims of Marconi Scheme Creditors as at 27 March 2003 will be compromised
in consideration for a distribution in specie (pro rata to their admitted
claims) of all of Marconi's assets, net of a reserve in respect of Marconi's
ongoing costs. Marconi's assets will principally comprise the package of cash,
new senior notes, new junior notes and new shares of Marconi Corporation which
Marconi will receive as a result of the Marconi Corporation Scheme from the
Eurobonds and the Yankee Bonds (the "Bonds") held by its subsidiary, Ancrane,
and monies owed by Marconi Corporation to Ancrane. The liability of Marconi in
respect of the claims of Marconi Scheme Creditors will be extinguished.
The Marconi Scheme provides that a first initial distribution of Marconi Scheme
consideration will take place on the Marconi Scheme becoming effective, at the
same time as the first initial distribution under the Marconi Corporation
Scheme. In summary, each Marconi Scheme Creditor that participates in the first
initial distribution in the Marconi Scheme will be entitled to receive (assuming
no increase in the cash element of the Marconi Corporation Scheme Consideration
but that the Marconi Scheme becomes effective on the same day as the Marconi
Corporation Scheme), for each GBP1,000,000 of admitted claim, an initial
distribution of approximately: GBP9,446 cash; GBP14,554 equivalent in aggregate
principal amount of new senior notes (which will be denominated in euro and/or
US dollars, subject to elections made in claim forms and account holder
letters); GBP9,959 equivalent in aggregate principal amount of new junior notes
(which will be denominated in US dollars); and 32,182 new Marconi Corporation
shares.
The Marconi Scheme requires the approval of Marconi Scheme Creditors at the
meeting convened for that purpose (the "Marconi Scheme Meeting"); the sanction
of the Court by an order (the "Marconi Scheme Order"); and the sealing of that
order and the delivery of a copy of it for registration to the Registrar of
Companies. The Marconi Scheme Order will not be delivered for registration
unless and until:
a. Marconi has, following the passing of a unanimous Board resolution to
approve the same, provided confirmation in writing to the prospective
Supervisors (for the sole benefit of the prospective Supervisors) prior to
each of (i) the release of the interim security granted by Marconi
Corporation through its special purpose subsidiary Highrose Limited, (ii)
the Marconi Scheme Meeting, (iii) the hearing to sanction the Marconi
Scheme and (iv) the Effective Date, to the effect that Marconi remains
satisfied that the reserves built in to the Marconi Scheme are sufficient
to meet distributions due to be made to all Marconi Scheme Creditors;
b. the prospective Supervisors of the Marconi Scheme have provided confirmation
in writing to Marconi (for Marconi's sole benefit) on the day of, but prior
to, each of events (i) to (iv) in (a) above to the effect that they have no
reason to disagree with Marconi's view that the reserves built into the
Marconi Scheme are sufficient to meet distributions due to be made to all
Marconi Scheme Creditors;
c. a permanent injunction order is made in the US Bankruptcy Court in respect
of the Marconi Scheme; and
d. a copy of the Marconi Corporation Scheme Order has been delivered to the
Registrar of Companies for registration.
If the Court makes the Marconi Scheme Order, Marconi anticipates that the order
of the US Bankruptcy Court will be granted. Marconi will not pursue a permanent
injunction order of the US Bankruptcy Court unless the Court makes both the
Marconi Corporation Scheme Order and the Marconi Scheme Order. If all of the
above conditions are not satisfied by 19 June 2003 the Marconi Scheme will be
withdrawn. Marconi will undertake to the Court to file the Marconi Scheme Order
with the Registrar of Companies as soon as the conditions set out above are
satisfied provided such conditions are satisfied on or before 19 June 2003.
No member of the Marconi group will vote at either of the Scheme Meetings.
Recommendation
Marconi Corporation and Marconi believe that, given the Marconi group's
financial position, the proposed Restructuring is in the best interests of all
stakeholders, including Scheme Creditors, Bondholders and Marconi's
shareholders. If the Restructuring is not approved, the severity of the Marconi
group's financial position is such that Marconi Corporation and Marconi would
have no reasonable prospect of avoiding insolvency proceedings which would mean
that there would be a lower return to Scheme Creditors, accompanied by
uncertainty and delay, and no return whatsoever to Marconi shareholders.
Accordingly, Marconi Corporation recommends that Marconi Corporation Scheme
Creditors (including definitive holders of Bonds) vote in favour of the Marconi
Corporation Scheme at the Scheme Meeting of Marconi Corporation Scheme Creditors
and Marconi recommends that Marconi Scheme Creditors (including definitive
holders of Bonds) vote in favour of the Marconi Scheme at the Scheme Meeting of
Marconi Scheme Creditors.
Expected Timetable of principal events
Latest time and date for delivery of claim forms to KPMG in order for Scheme 5.00 p.m. on 17 April 2003
Creditors to be able to participate in the first initial distribution of
Scheme Consideration
Latest time and date for delivery of account holder letters to Bondholder 5.00 p.m. (New York City time) on 17
Communications Group in order for designated recipients of Bondholders to April 2003
participate in the first initial distribution of Scheme Consideration and
latest recommended time and date for such delivery in order for definitive
holders of Bonds to vote at the Scheme Meetings
Latest recommended time and date by which KPMG should receive forms of proxy 5.00 p.m. on 17 April 2003
for voting at the Scheme meetings
Latest time and date by which KPMG should receive forms of proxy for voting at 12 noon on 24 April 2003
the Scheme meetings
Scheme meetings 25 April 2003
Court hearing to sanction the Schemes 12 to 13 May 2003
US Bankruptcy Court hearing for section 304 US Bankruptcy Code permanent 14 May 2003
injunction orders
Last day of dealings in shares in Marconi 16 May 2003
Effective date of the Schemes 19 May 2003
Listing of the New Marconi Corporation Shares, Warrants and Notes 8.00 a.m. on 19 May 2003
First initial distribution of Scheme Consideration 19 May 2003
The dates in this timetable assume that neither of the Scheme meetings is
adjourned. It is therefore not possible to be specific about these dates. It is
also possible that the drawing up of the order or orders of the Court
sanctioning one or both of the Schemes may be delayed if any person appeals the
relevant order or orders. The times in this timetable refer to London time
unless otherwise specified.
UK Listing Authority waiver
The UKLA has granted a waiver of paragraph 9.22 of the Listing Rules which would
otherwise require the consent of Marconi shareholders to the issue of the New
Shares (the "Waiver"). Accordingly, the Schemes are not conditional on the
approval of Marconi shareholders.
The board of directors of Marconi (the "Directors"), Lazard Brothers & Co.,
Limited ("Lazard") and Morgan Stanley & Co. Limited ("Morgan Stanley") as joint
sponsors to Marconi Corporation and, for the purposes of the Waiver only,
Marconi have confirmed to the UKLA that Marconi is in severe financial
difficulty. The Directors have, and have confirmed to the UKLA that they have,
considered the methods to resolve Marconi's current financial position and have
concluded that the Restructuring represents the only viable alternative to an
insolvency procedure. The Directors are of the opinion, and have confirmed to
the UKLA, that unless the Restructuring is successfully concluded, Marconi would
be forced into an insolvency proceeding and that the Restructuring preserves
greater economic benefit for shareholders than any such proceeding. The
Directors have been advised that, in these circumstances, Marconi shareholders
could not expect to receive any return from such a procedure. The Directors have
confirmed that negotiations in relation to the Restructuring have made it
apparent that the Restructuring depends on there being no shareholder vote and
therefore, they believe that it is inappropriate for Marconi shareholders to
have a vote in the circumstances. The Directors have confirmed to the UKLA that,
given these circumstances and having been so advised by Lazard and Morgan
Stanley, they believe that the terms of the Restructuring (including the Waiver)
constitute the only option that would be likely to provide economic value for
Marconi shareholders and therefore, in these circumstances, are fair and
reasonable so far as Marconi shareholders are concerned. The Directors have also
confirmed to the UKLA that, having taken advice from Marconi's legal and
financial advisers, they believe that the Restructuring (including the Waiver)
is in the best interests of the shareholders of Marconi as a whole. Lazard and
Morgan Stanley have advised the Directors, and have confirmed to the UKLA that
they have so advised the Directors, that it is their belief that the terms of
the Restructuring (including the waiver of the requirement for Marconi
shareholder approval) constitute the only option that would be likely to provide
economic value for Marconi shareholders and therefore, in these circumstances,
are fair and reasonable so far as Marconi shareholders are concerned. In
providing this financial advice Lazard and Morgan Stanley have taken into
account the Directors' commercial assessment of the Restructuring.
Lazard and Morgan Stanley are advising Marconi Corporation and Marconi and no
one else in connection with aspects of Restructuring and will not be responsible
to anyone other than Marconi Corporation and Marconi for providing the
protections afforded to their clients or for providing any advice in connection
with any aspect of the Restructuring.
The joint co-ordinators of the syndicate banks (the "Joint Co-ordinators") have
confirmed to the UKLA that the majority banks will not make further finance or
facilities available to Marconi and that, in the event that a Marconi
shareholder vote in relation to the Restructuring is required, the Majority
Banks will remove their support thereby forcing Marconi into immediate
insolvency. The Joint Co-ordinators have also confirmed to the UKLA that the
majority banks' willingness to allow the Restructuring to proceed is dependent
on the Restructuring not requiring a vote of Marconi's shareholders to approve
the Restructuring and that the majority banks are of the view that, having
regard to the financial condition of the Marconi group, a shareholder vote is
disproportionate to Marconi's shareholders' economic interest in the Marconi
group.
In the opinion of Marconi Corporation, subject to the Schemes becoming effective
in accordance with their terms and having regard to the facilities available to
the Marconi Corporation group, the working capital available to the Marconi
Corporation group is sufficient for the Marconi Corporation group's present
requirements, that is for the next 12 months following the date of this
announcement.
Prospects
Upon completion of the Restructuring, Marconi Corporation and Marconi expect the
Marconi group (comprising Marconi Corporation and its subsidiaries) to be better
positioned to compete effectively in the areas of the broader telecommunications
equipment market on which it has chosen to focus.
The market for telecommunications equipment and services remains difficult.
During the first three quarters of the financial year ending 31 March 2003 the
annualised rate of Core (as defined in the Prospectus) sales has declined by
around 10 per cent. from approximately GBP2 billion in the first quarter to
approximately GBP1.8 billion in the third quarter. Marconi Corporation and
Marconi do not expect that the Group will benefit from a seasonal uplift in Core
sales during the fourth quarter of the financial year compared to the level
recorded in the third quarter (GBP456 million), contrary to the seasonal pattern
of customer demand in previous years. Despite this difficult business
environment, Marconi Corporation and Marconi believe that the previously
announced cost reduction initiatives currently being implemented will enable the
Group to make further progress during the final quarter of the financial year
ending 31 March 2003 towards its near term financial objectives to reduce costs
and to achieve operating cash breakeven before exceptional cash costs.
Furthermore, Marconi Corporation and Marconi believe that market volumes are
likely to contract further during the financial year ending 31 March 2004 and do
not expect to benefit from significant market share gains. As a result, the
Group believes that Core sales could decline by up to a further 5 per cent.
during the financial year ending 31 March 2004 compared to the annualised third
quarter trading levels (GBP1.8 billion).
In December 2002, the Group outlined its Core operating model and confirmed its
target is to achieve a gross margin run rate in the range of at least 24 to 27
per cent. of Core sales and an operating expenditure run rate in the range of 21
to 24 per cent. of Core sales during the financial year ending 31 March 2004.
The Group now believes that it will be able to reduce the Core operating cost
base to an annual run rate below GBP450 million during the financial year ending
31 March 2004 and thereby reduce its breakeven level of sales to below GBP1.7
billion per annum.
Although the Group's principal markets remain difficult, Marconi Corporation and
Marconi expect them to recover, at some stage, as end customer demand for fixed
or mobile broadband services increases. While Marconi Corporation and Marconi
cannot predict with any level of certainty the occurrence, timing or extent of
any recovery, they believe that the favourable longer-term dynamics of the
telecommunications market should enable the Group to improve margins and grow
profitably.
APPENDIX
Third parties involved in the negotiation of the Restructuring
Co-ordination committee for the syndicate banks Period as a member of committee
Barclays Bank PLC 22 October 2001 to present
HSBC Bank plc, London Branch (joint lead co-ordinator) 22 October 2001 to present
JPMorgan Chase Bank (joint lead co-ordinator) 22 October 2001 to present
The Royal Bank of Scotland plc 22 October 2001 to present
Commerzbank Aktiengesellschaft, London Branch 22 October 2001 to present
Intesa BCI S.p.A 22 October 2001 to 5 March 2003
Informal committee of bondholders Period as member of committee
Cargill Financial Markets PLC 10 April 2002 to present
Appaloosa Management LP (1) 10 April 2002 to present
AIG Global Investment Corp(2) 10 April 2002 to present
Teachers Insurance and Annuity Association of America 10 April 2002 to present
Metropolitan Life Insurance Company 10 April 2002 to 25 November 2002
(1) Appaloosa Management LP is a member of the informal committee of
bondholders as an investment manager for and on behalf of Appaloosa
Investment Limited Partnership I and other funds.
(2) AIG Global Investment Corp is a member of the informal committee
of bondholders as an investment adviser, for an on behalf of, The
Variable Annuity Life Insurance Company, American General Life and
Accident Insurance Company and other advisory clients and accounts.
NOTES TO EDITORS
About Marconi plc
Marconi group is a global telecommunications equipment and solutions business
headquartered in London. The group's core business is the provision of
innovative and reliable optical networks, broadband routing and switching and
broadband access technologies and services. The group's aim is to help fixed and
mobile telecommunications operators worldwide reduce costs and increase
revenues.
The group'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.
This press release contains forward-looking statements with respect to products,
partners, customers, future growth and other matters. Please refer to the Form
20-F report and Form 6-K reports filed by Marconi plc with the United States
Securities and Exchange Commission for a discussion of risks that could cause
actual results to differ materially from such statements.
Copyright (c) 2003 Marconi plc. All rights reserved. All brands or product names
are trademarks of their respective holders.
Contacts
Joe Kelly / David Beck
Public Relations
Marconi plc
+44 (0) 207 306 1771
joe.kelly@marconi.com
Heather Green
Investor Relations
Marconi plc
+44 (0) 207 306 1735
heather.green@marconi.com
Private Shareholder Enquiries only
Company Secretary's Office
Marconi plc
+44 (0) 207 306 1410
shareholder.enquiries@marconi.com
1. 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 and Marconi Corporation plc (the
"Companies") 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 Companies and
their 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 Companies' Form 20-F and Form
6-K reports filed with the U.S. Securities and Exchange Commission. The
Companies disclaim any obligation to publicly update or revise these
forward-looking statements, whether to reflect new information or future events
or circumstances or otherwise, subject to their obligations under the FSA
Listing Rules.
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: 31 March 2003