Banks put pressure on Marconi

TELECOMS equipment group Marconi's bankers are expected to demand covenants and higher interest payments in return for allowing the company more time to repay its £3.6bn of debt.

HSBC and Barclays have been appointed lead negotiators for the debt talks and four further banks are to be members of a consultation group.

Marconi, which last week admitted to second-quarter operating profits of only £5m, has no covenants attached to its loans at present, having negotiated them several years ago when it was called GEC and had a higher credit rating.

'Marconi's debt is not being restructured. It is being renegotiated. The difference is that this is new money with different conditions attached. The pricing, the structure and the covenant situation are all being looked at,' said one banker.

The group has already reduced its debt through the sale of its medical systems business for almost £800m. It has pledged to bring debt down to £3.2bn at most by next spring.