Marconi limps towards relisting at £400m value

The telecoms equipment maker Marconi admitted yesterday that trading continued to deteriorate as it inched closer to completing its financial restructuring – a move that could see it start life with a £400m valuation.

Sales in the core business in the three months to 31 March, Marconi's fourth quarter, were £426m – a 4 per cent fall from the previous quarter, after stripping out disposals and closures, and well beneath the £693m in the same quarter a year before.

The update came just eight working days before shares in the restructured company are scheduled to begin trading. Sources said the stock was changing hands at about 40p in the grey market, valuing the group at about £400m.

Mike Parton, the chief executive, was confident yesterday that the process, which will see Marconi's bondholders and banks gain control of 99.5 per cent of the business, was close to completion. "I'm 99.5 per cent certain that this [the restructuring] will go through," he said.

The process is expected to be signed off by courts in the UK and US next week. Shares in the old Marconi will delist from the stock market a week on Friday with shares in the new Marconi starting trading on 19 May.

While Marconi refused to give any guidance on current trading, Mr Parton said there had been "nothing untoward" to report in the quarter so far.

The company, which reports its figures in full on 29 May, said the war in Iraq had made trading particularly tough in the Middle East in the period. Nevertheless, Mr Parton said the 4 per cent fall in sales in the three-month-period was in line with the company's expectations and emphasised that the company had improved margins to 24 per cent from 22 per cent in the period.

"Our profitability is improving all the time. Our cash generation is also improving all the time. But the market is still getting worse," he admitted. "The markets for our products and services continue to decline but we have been able to limit our sales fall to single figure percentages in each of the last three quarters." He said he would not be confident in calling the bottom of the market until he had seen at least two quarters of flat, rather than falling, sales.

BT remains Marconi's single biggest customer. It accounted for 20 per cent of sales in the period – slightly more than the 19 per cent it accounted for in the previous quarter.

Separately Marconi announced it had been chosen by Australia's Telstra as one of two preferred suppliers of telecoms equipment.