Marconi to redeem notes with $375 million sale proceeds

Pittsburgh, July 7 - Marconi Corp. plc will use the $375 million in cash proceeds from the sale of its Outside Plant & Power business to Emerson to fund a mandatory redemption of its 8% guaranteed senior secured notes due 2008, according to a company news release.

Following the redemption, $104 million in senior notes will be remaining.

The proceeds from the sale will be transferred to the mandatory redemption escrow account. When the balance of the escrow account reaches $30 million it triggers a mandatory partial redemption of Marconi's loan notes at 110% of par, the release said.

"The Outside Plant & Power business is the last of the businesses we identified as not being core to Marconi's ongoing business," Marconi chief executive Mike Parton said in the release. "We are delighted with this transaction, the cash proceeds from which will enable us to continue to reduce group debt and the associated interest payments."

Marconi's board confirmed its strategy to continue to pay down the remaining senior notes, according to the release.

Emerson and its affiliates will assume all obligations under pension and retirement benefit plans of current and former OPP employees. The net liability associated with these plans was approximately $31 million pre-tax as reported in Marconi's Group balance sheet as of March 31.

Marconi is a London-based global telecommunications equipment, services and solutions company.

St Louis-based Emerson provides solutions to customers in electronics and telecommunications process control, industrial automation, heating, ventilating and air conditioning.

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