A trader at a large US investment bank in London said Marconi could prove the biggest test so far for European credit derivatives documentation and had five times the number of issues compared with Railtrack – the UK rail operator that hit financial difficulties at the end of last year.
The restructuring of Marconi Corporation plc is targeted for January 2003. Under the terms of the restructuring, lending banks and bondholders will gain 99.5% of the equity in the newly restructured company that will be dual-listed on the London Stock Exchange and Nasdaq in the US. Marconi claims will be exchanged for a package of cash, the new equity and new debt securities. But the Marconi proposals still need formal approval by creditors and loan syndicate banks, although one trader said there is unlikely to be much disagreement on the issue.
Credit default swaps protection has been unavailable on Marconi for the best part of a year.
Isda officials were not immediately available for comment.