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Marconi to sell internet service to help company's recovery.

Embattled telecoms group Marconi yesterday pledged to slash its debt by a quarter after agreeing to sell its North American broadband internet business.

The group, which is in its first full trading year following a life-saving restructuring, has signed an agreement for the disposal of its North American Access arm to US-based Advanced Fibre Communications (AFC).

It is hoped the sale - worth $240m (pounds 135m) - will be completed by the end of March if it gains the backing of US regulators.

Marconi said proceeds will be used to clear $218m (pounds 120.3m) of debt from its accounts, saving more than $20m (pounds 11m) in interest charges each year.

This will leave the group, which has UK bases at Coventry, Nottingham, Liverpool and Chelmsford, with borrowings of $684m (pounds 377.4m).

Marconi chief executive Mike Parton described the sale as a "win-win situation" and stressed there would be no impact on its remaining operations across the Atlantic.

The decision to sell its NAA arm, which provides broadband access solutions for business, was taken last year but tough market conditions led to all deals being put on hold, he said.

This move paid off as the business moved back into the black during the six months to September 30, with NAA contributing operating profits of pounds 3m and sales of pounds 55m.

Mr Parton remained upbeat on current trading, with the group on course to beat its sales performance of pounds 389m for the three months to September 30.

Marconi completed a life-saving financial restructuring in May involving the exchange of pounds 4.7bn of debt for equity. The move handed banks and bondholders control of a new company known as Marconi Corporation.

The group has also pledged to reduce its workforce from 14,100 employees at September 30 to 13,000 employees by March, largely through outsourcing.
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Title Annotation:Features
Publication:The Journal (Newcastle, England)
Date:Jan 7, 2004
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