SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2003
MARCONI PLC
MARCONI CORPORATION PLC
(Exact name of Registrant as specified in its Charter)
4th Floor, Regents Place
338 Euston Road
London NW1 3BT
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F __X__ Form 40-F ______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _____ No __X__
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-________.)
INCLUDED DOCUMENTS
Included in this report are letters dated March 31, 2003, which were sent by
Marconi plc ("PLC") to holders of its shares and American Depository Receipts
representing such shares ("ADRS"). The purpose of the letters is to provide plc
shareholders and ADR holders with information regarding how the proposed
restructuring of plc and Marconi Corporation plc will affect them. Detailed
information with respect to the restructuring is included in the scheme document
dated March 31, 2003, submitted yesterday under cover of a separate report on
Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARCONI PLC
By: /s/ Mary Skelly
-----------------------------
Name: Mary Skelly
Date: 1 April 2003 Title: Secretary
MARCONI CORPORATION PLC
By: /s/ Mary Skelly
-----------------------------
Name: Mary Skelly
Date: 1 April 2003 Title: Secretary
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN
ANY DOUBT ABOUT THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT A PERSON
AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 SPECIALISING IN
ADVISING ON TRANSACTIONS OF THE KIND DESCRIBED IN THIS DOCUMENT.
If you have sold or otherwise transferred all of your shares in Marconi plc,
please send this letter at once to the purchaser or transferee or to the
stockbroker, bank or other agent through whom the sale was effected for onward
transmission to the purchaser or transferee.
(MARCONI LETTERHEAD WITH LOGO)
MARCONI PLC
New Century Park
PO Box 53
Coventry
Warwickshire
CV3 1HJ
(Registered in England with registered number 3846429)
31 MARCH 2003
Dear Shareholder,
I am writing to update you on the planned financial restructuring of Marconi plc
and Marconi Corporation plc, and to inform you of both the new shares and
warrants, if any, in Marconi Corporation plc which you will receive and what
will happen to your Marconi plc shares, should the proposed restructuring
proceed as anticipated.
On 29 August 2002, we announced that we had reached a non-binding agreement with
the steering committee for our syndicate banks and the informal ad hoc committee
of certain bondholders on the principles for the financial restructuring of the
Marconi group. This agreement was a major milestone in the process of restoring
Marconi to a stable financial footing and forms the basis for the final terms of
the restructuring. On 16 December 2002 we announced modifications to that
agreement and on 7 February and 18 March 2003 we announced further updates
concerning the restructuring.
If the proposed restructuring proceeds as anticipated, it is expected that
Marconi plc shares will be de-listed and that new shares and warrants in Marconi
Corporation plc will be admitted to the Official List of the UK Listing
Authority and to trading on the London Stock Exchange's market for listed
securities on or about 19 May 2003. Marconi Corporation plc will then become the
new holding company of the Marconi group (which will not include Marconi plc and
a number of its subsidiaries). Marconi plc will distribute all of its assets
(net of certain ongoing costs) over time to its creditors and is expected
subsequently to be liquidated or dissolved. Eligible Marconi plc shareholders
will receive, at no cost, new shares and warrants to subscribe for further
shares in Marconi Corporation plc. We expect that these new shares and warrants
will be distributed to eligible Marconi plc shareholders on or about 23 May
2003.
The Board of Marconi plc believes that the proposed terms of the restructuring
represent the only realistic prospect for the survival of the Marconi group and,
therefore, the best available outcome for our shareholders, our employees, our
customers and suppliers and our creditors. It is clear that if Marconi plc
entered administration or any other insolvency procedure, given its financial
position and the fact that the syndicate banks and bondholders (and other
creditors) would have the first claim on the assets of Marconi plc and Marconi
Corporation plc, you could not expect to receive any return from such a
procedure.
WHAT YOU WILL RECEIVE UNDER THE RESTRUCTURING
If the restructuring takes place, each eligible shareholder of Marconi plc
(being those shareholders, other than certain overseas shareholders, on the
register of members at the close of business on the business day before the
restructuring becomes effective) will receive, with no price payable, new shares
and warrants in Marconi Corporation plc approximately pro rata to existing
holdings in Marconi plc in the following proportions.
FOR EVERY 559 MARCONI PLC SHARES YOU WILL RECEIVE 1 NEW MARCONI
CORPORATION PLC SHARE
FOR EVERY 56 MARCONI PLC SHARES YOU WILL RECEIVE 1 NEW MARCONI
CORPORATION PLC WARRANT
In any event you will receive at least one new Marconi Corporation plc share
(even if you hold less than 559 Marconi plc shares). The restructuring is
expected to become effective on 19 May 2003.
There are legal requirements in certain jurisdictions which may prevent the
distribution of shares and/or warrants to you, in which case you may receive the
net cash proceeds of their sale. Marconi Corporation plc has determined that
prohibitions do currently apply with respect to Malaysia and Italy. You should
read Part 3 of this letter for further information.
FRACTIONS
Depending on the number of shares you hold in Marconi plc, the calculation of
some shareholders' allocations will give rise to fractions of new shares and
warrants in Marconi Corporation plc. For holdings of more than 559 shares in
Marconi plc, allocations of Marconi Corporation plc shares will be rounded down
to the nearest whole number. Shareholders with fewer than 559 shares in Marconi
plc will receive one Marconi Corporation plc share.
Shareholders holding fewer than 56 shares in Marconi plc will receive no
warrants. Any fraction of Marconi Corporation plc warrants will be rounded down
to the nearest whole number.
Any fractions of shares which remain after the distribution described above will
be aggregated and sold in the market and the proceeds retained for the benefit
of Marconi Corporation plc.
SHAREHOLDERS WITH A REGISTERED ADDRESS IN THE UK, CHANNEL ISLANDS, ISLE OF MAN
OR IRELAND
If you hold your Marconi plc shares in CREST your new Marconi Corporation plc
shares and, if applicable, warrants will be credited to the same CREST account.
If you hold a Marconi plc share certificate, are over 18 and have a registered
address in the UK, Channel Islands, Isle of Man, or Ireland, then your share(s)
and, if applicable, any warrants will be held in a nominee account on your
behalf operated by Marconi Corporation plc's registrars. You may transfer your
shares and warrants out of the nominee account. This can be done free of charge
whilst the free dealing service referred to below is available. After that
period a charge of L15 will be payable. Details, including the terms and
conditions, relating to the nominee account will be sent to you when you are
notified of the number of shares and warrants allocated to you. If you hold a
Marconi plc share certificate, but are aged under 18 or have a registered
address outside the UK, Channel Islands, Isle of Man or Ireland, you will
receive a certificate for your new share(s) and, if applicable, warrants, which
will be posted to you at your risk unless you have a registered address in a
jurisdiction which prevents this (see Part 3).
NEW SHARES AND WARRANTS
You will be notified of the number of new shares and, if applicable, warrants
which have been allocated to you shortly after the date the restructuring
becomes effective.
The new shares will be ordinary shares of nominal value 5p each in Marconi
Corporation plc. Each warrant entitles the holder to subscribe for one new
ordinary share of Marconi Corporation plc on payment of an initial subscription
price of 150p per share. This subscription price and/or the number of shares
which may be subscribed for are subject to adjustment in the event of certain
occurrences (including a share split or consolidation or a rights or bonus issue
by Marconi Corporation plc). This right to subscribe may be exercised at any
time from (and including) the day following the date of issue of the warrants up
to (and including) the fourth anniversary of the date of their issue. The new
shares and the new ordinary shares which will be issued on exercise of the
warrants will rank equally in all respects (including for dividends, although it
is not expected that Marconi Corporation plc will pay dividends in the
foreseeable future) with all other ordinary shares of Marconi Corporation plc.
If, in respect of your Marconi plc shares, you have given, or give before the
restructuring is completed, a mandate relating to dividend payments or an
instruction relating to Marconi plc notices, then it will remain valid and
effective in relation to your new Marconi Corporation plc shares from the date
that they are issued. If you wish to change a mandate or instruction, you should
contact Marconi plc's registrars, Computershare Investor Services PLC, at P.O.
Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH.
The Board of Marconi Corporation plc may propose a resolution for the
consolidation of ordinary shares at its next Annual General Meeting. However, at
this time, the Board has not made a decision to propose a consolidation.
SHARE AND WARRANT DEALING SERVICE
If you hold new shares and, if applicable, warrants through the nominee account,
a commission-free postal dealing service allowing you, on one occasion only,
either to sell all (but not some of) your new shares and warrants or to buy
shares (but not warrants) will be made available to you. If you wish to buy
shares using this
2
service you may only do so if the value of shares purchased is between L100 and
L1,000. 0.5% stamp duty reserve tax will be payable by you on any purchase of
shares in this service. The dealing service will be operated by Computershare
Investor Services PLC on behalf of Marconi Corporation plc from the date of
listing of the new shares and warrants up to 29 August 2003 or such earlier date
as may be notified to you on not less than two weeks' notice. Details, including
the terms and conditions, of this service will be sent to you when you are
notified of the number of new shares and warrants allocated to you.
DONATIONS TO CHARITY VIA SHAREGIFT
We are aware that many of our shareholders will, if the restructuring takes
place, receive a very small number of new shares and, if applicable, warrants.
As well as the share and warrant dealing service referred to above, we intend to
make arrangements for shareholders who hold shares and, if applicable, warrants
through the nominee, if they choose, to donate their new shares or warrants to
charity via ShareGift, the charity share donation scheme (registered charity
1052686). Details of these arrangements will be contained in the terms and
conditions of the nominee service sent to you when you are notified of the
number of new shares and, if applicable, warrants allocated to you.
LISTING AND DEALING OF NEW SHARES AND WARRANTS
Application has been made to admit the new shares and warrants to the Official
List of the UK Listing Authority and to trading on the London Stock Exchange.
Subject to the restructuring taking place, it is expected that admission will
become effective and dealings will commence on the London Stock Exchange at 8.00
a.m. on 19 May 2003.
DE-LISTING OF MARCONI PLC
It is currently intended that Marconi plc will apply for cancellation of the
listing of its shares on the Official List of the UK Listing Authority and the
trading of its shares on the London Stock Exchange with effect from 8.00 a.m. on
19 May 2003. It is expected that trading in Marconi plc shares will cease at
4.30 p.m. on 16 May 2003.
AMERICAN DEPOSITARY RECEIPTS (ADRS)
Marconi Corporation plc will establish an ADR programme in relation to the new
shares, and holders of Marconi plc ADRs will receive any new shares to which
they are entitled in the form of new ADRs in Marconi Corporation plc. The terms
of the new Marconi Corporation plc ADRs will be substantially the same as those
of the existing Marconi plc ADRs, except that each Marconi Corporation plc ADR
will represent 10 new shares in Marconi Corporation plc. Further details of the
arrangements for distribution of new shares and warrants in Marconi Corporation
plc will be provided to Marconi plc ADR holders through the ADR depositary in
due course. Application will be made to list the new ADRs on NASDAQ. It is
currently expected that this listing will become effective during the third
calendar quarter of 2003, after the restructuring is completed. Holders of
Marconi plc ADRs in the United States should read "Certain United States Federal
Income Tax Consequences" in Part 2 of this letter.
THE RESTRUCTURING PROCESS
The restructuring process is proposed to be effected by means of two schemes of
arrangement under English law, one for Marconi plc and the other for Marconi
Corporation plc. The schemes are formal processes under which both Marconi plc
and Marconi Corporation plc will be released from claims of creditors (except
certain excluded creditors) in return for a package of securities (including new
shares) and cash. The Marconi plc scheme is conditional on the Marconi
Corporation plc scheme becoming effective. The Marconi Corporation plc scheme is
not, however, conditional on the Marconi plc scheme becoming effective. If the
Marconi plc scheme does not become effective, there will be no material effect
on the financial or working capital position of Marconi Corporation plc.
Accordingly it is possible that the restructuring may proceed even if the
Marconi plc scheme does not become effective.
The effectiveness of the schemes is not conditional on admission of the Marconi
Corporation plc shares and warrants to the Official List of the UK Listing
Authority or to trading on the London Stock Exchange or any other securities
exchange. While it is expected that admission will take place upon the schemes
becoming effective, it is possible that permission for admission may be delayed
or denied. If admission to the Official List and to trading on the London Stock
Exchange does not take place upon the restructuring becoming effective, this
will inhibit the development of a liquid trading market for the new shares,
which is likely to have a material
3
adverse effect on their value. In addition, Marconi Corporation plc would be
unable to provide the nominee account service and the share and warrant dealing
service referred to above. If admission to the Official List and to trading on
the London Stock Exchange does not take place as and when expected, Marconi
Corporation plc will use its reasonable efforts to list the shares and warrants
on another recognised securities exchange.
Each scheme must be approved by a prescribed majority of creditors of the
appropriate company before it can become effective. Meetings of the creditors of
each of Marconi plc and Marconi Corporation plc have been ordered by the Court
to take place on 25 April 2003. If they are approved, each scheme will take
effect once the Court has sanctioned the relevant scheme and the Court order
sanctioning the relevant scheme has been delivered to the Registrar of Companies
for England and Wales for registration.
Marconi Corporation plc will not take the necessary steps to make the Marconi
Corporation plc scheme effective unless it has provided and received certain
confirmations relating to its working capital position and the sufficiency of
the reserves in the Marconi Corporation plc scheme, the US Bankruptcy Court
grants an order which effectively makes the Marconi Corporation plc scheme
binding in the United States, and the conditions precedent to certain financing
facilities (other than those relating to the Marconi Corporation plc scheme
becoming effective) are satisfied or waived.
Marconi plc will not take the necessary steps to make the Marconi plc scheme
effective unless it has provided and received certain confirmations relating to
the sufficiency of the reserves in the Marconi plc scheme, the US Bankruptcy
Court grants an order which effectively makes the Marconi plc scheme binding in
the United States and a copy of the Court order sanctioning the Marconi
Corporation plc scheme has been delivered to the Registrar of Companies for
England and Wales for registration.
It is anticipated that if the Court sanctions the schemes then the orders of the
US Bankruptcy Court in relation to the schemes will be granted. Shareholders
will receive new shares and, if applicable, warrants in Marconi Corporation plc
as described above once the Marconi Corporation plc scheme has become effective.
If either of the schemes is not effective by 19 June then that scheme will be
withdrawn. If the Marconi Corporation plc scheme is withdrawn then the Marconi
plc scheme will also be withdrawn, but the Marconi Corporation plc scheme will
not be withdrawn only because the Marconi plc scheme is withdrawn.
Marconi Corporation plc has published a prospectus in connection with its
application for admission of the new shares and warrants to the Official List of
the UK Listing Authority and to trading on the London Stock Exchange. Further
details relating to the new shares, the warrants, Marconi Corporation plc and
the restructuring are set out in the prospectus. Copies of the prospectus are
available on request by telephoning our shareholder helpline on +44 (0) 870 702
0118. You should note that the shareholder helpline cannot give financial advice
or advise on the merits of the restructuring. The prospectus will also be
available to persons who are resident in the United Kingdom, the Channel Islands
or the Isle of Man on our website, www.marconi.com.
EXPECTED TIMETABLE
<Table>
<Caption>
2003
------------------------
UK Court meetings of creditors of Marconi plc and Marconi
Corporation plc 25 April
UK Court hearings to sanction the schemes 12 to 13 May
US Court hearing for permanent injunction order 14 May
Last day of dealings in Marconi plc shares on the London
Stock Exchange 16 May
Effective date of the schemes 19 May
Dealings in the new shares and the warrants expected to
commence on the London Stock Exchange 8.00 a.m. on 19 May
Crediting of new shares and warrants to CREST accounts 19 May
Despatch of statements of account for new shares and,
if applicable, warrants held in nominee account and share
and warrant certificates by 23 May
</Table>
The times and dates given are based on our current expectations and may be
subject to change.
QUESTIONS AND ANSWERS
Answers to some frequently asked questions in connection with shareholders'
allocations of new shares and warrants are contained in Part 1 of this letter.
4
TAXATION
Part 2 of this letter sets out certain UK and US tax considerations for
shareholders in relation to the restructuring. These comments are of a general
nature; they are included for information purposes only and are not intended to
be legal or tax advice. You should consult your own tax advisers with respect to
the possible tax consequences of receiving the new shares and, if applicable,
the warrants. Further discussion of certain UK and US tax considerations
relating to ownership of the new shares and warrants is set out in the
prospectus.
OTHER MATTERS
You should not regard this letter or the offer of the share and warrant dealing
service described above as an encouragement or a recommendation to deal in new
shares or warrants and should seek your own advice.
All cash payments will be made in pounds sterling by a cheque drawn on a UK
clearing bank which will be posted to you at your own risk.
ACTION TO BE TAKEN BY YOU
YOU NEED NOT TAKE ANY ACTION IN RESPECT OF THIS LETTER IN ORDER TO BE ALLOCATED
NEW SHARES AND, IF APPLICABLE, WARRANTS IN THE RESTRUCTURING. If you are
allocated shares and, if applicable, warrants held through the nominee account,
you will receive notification of the number of new shares and/or warrants
allocated to you, together with details of the share and warrant dealing service
(if you are eligible for this service) together with further details of the
nominee account and how to make donations to charity via ShareGift. Where it is
necessary to issue certificates in respect of shares and, if applicable,
warrants, or to send you a cheque in respect of net sale proceeds these will be
posted to you.
Yours sincerely
(John Devaney Signature)
JOHN DEVANEY
CHAIRMAN
MARCONI PLC
5
PART 1 -- SOME QUESTIONS AND ANSWERS RELATING TO THE RESTRUCTURING
- --------------------------------------------------------------------------------
WHAT HAPPENS NEXT?
The restructuring is proposed to be effected by means of two schemes of
arrangement, each of which is subject, amongst other things, to the approval of
a prescribed majority of creditors of Marconi plc and Marconi Corporation plc
respectively. Meetings of the creditors of Marconi plc and Marconi Corporation
plc have been ordered by the Court to take place on 25 April 2003. It is
currently anticipated that the new shares and warrants of Marconi Corporation
plc will be admitted to the Official List of the UK Listing Authority and to
trading on the London Stock Exchange on 19 May 2003 and will be distributed to
eligible shareholders of Marconi plc on or shortly after that date.
WHAT IS A WARRANT?
A warrant is an instrument that gives you the right (but not the obligation) to
subscribe for new shares in a company at a fixed price (subject to adjustment).
Each warrant that will be issued following the restructuring becoming effective
will permit the holder to subscribe for one new share of Marconi Corporation plc
at a price of 150p per share, at any time from (and including) the day following
the date of issue of the warrants up to (and including) the fourth anniversary
of the date of their issue (subject to certain restrictions relating to US
securities laws). This price and/or the number of shares which may be subscribed
are subject to adjustment in the event of certain occurrences (including a share
split or a consolidation or a rights or bonus issue by Marconi Corporation plc).
While the warrants will be issued with no price payable, on exercise of the
warrants, the subscription price per share will be payable in order to receive
new shares of Marconi Corporation plc. The new shares and the new ordinary
shares which will be issued on exercise of the warrants will rank equally in all
respects with all other ordinary shares of Marconi Corporation plc. The warrants
can be exercised at any time from (and including) the day following the date of
issue of the warrants up to (and including) the fourth anniversary of the date
of their issue, however, it would be uneconomical to exercise warrants at any
time when the market price of the shares to be issued on exercise is less than
the exercise price.
The warrants, until or unless shares are subscribed for on their exercise, do
not carry any voting rights nor do they provide an entitlement to receive
dividends.
Marconi Corporation plc will file a registration statement with the US
Securities and Exchange Commission to permit the exercise of warrants by holders
located in the United States. Until this registration statement is effective
(which is currently expected to occur during the third calendar quarter of
2003), warrants will not be exercisable by any person in the United States and
Marconi Corporation plc will not be obliged to permit any exercise of warrants
unless satisfied that an exemption from the registration requirements of US
securities law (for example, the exemption for transactions with persons not
located in the United States provided by Regulation S) is available.
IN WHAT FORM WILL MY NEW SHARES AND WARRANTS BE ISSUED?
If you hold your Marconi plc shares in CREST, your new Marconi Corporation plc
shares and warrants will be credited to the same CREST account. If you hold a
Marconi plc share certificate, are over 18 and have a registered address in the
UK, Channel Islands, Isle of Man or Ireland, then your shares and warrants will
be held in a nominee account on your behalf by a nominee. Details relating to
the nominee account will be sent to you when you are notified of the number of
shares and/or warrants allocated to you. If you hold a Marconi plc share
certificate but are aged under 18 or have a registered address outside the UK,
Channel Islands, Isle of Man or Ireland, you will receive a certificate for your
new share(s) and, if applicable, warrants which will be posted to you at your
own risk unless you have a registered address in a jurisdiction which prevents
this.
If for any reason admission of the new shares and warrants to the Official List
of the UK Listing Authority and to trading on the London Stock Exchange does not
take place upon the restructuring becoming effective then the nominee account
service will not be available.
DO I HAVE TO HOLD MY SHARES AND WARRANTS THROUGH THE NOMINEE?
No. You may transfer your shares and warrants out of the nominee account. This
can be done free of charge whilst the free dealing service is available. After
that period a charge of L15 will be payable.
6
PART 1 -- SOME QUESTIONS AND ANSWERS RELATING TO THE RESTRUCTURING
- --------------------------------------------------------------------------------
WHAT WILL HAPPEN TO MY SHARES IN MARCONI PLC?
You will continue to be a shareholder of Marconi plc. However, subject to the
restructuring becoming effective, it is expected that Marconi plc's ordinary
shares will be de-listed on 19 May 2003. Under the terms of the scheme
of arrangement between Marconi plc and its creditors, all of the assets of
Marconi plc (net of the costs of administrating the scheme) will be distributed
to its creditors over time. Marconi plc is expected subsequently to be
liquidated or dissolved. As there will be no circumstances in which any value
will be returned to shareholders under the terms of the Marconi plc scheme of
arrangement, your Marconi plc shares will be worthless after the restructuring
becomes effective.
WHAT WILL MY NEW SHARES AND WARRANTS BE WORTH POST-RESTRUCTURING?
The market price of the new shares and warrants will depend on a large number of
factors. Once the new shares and warrants start trading on the London Stock
Exchange, you will be able to obtain details of the traded price of them from a
number of public sources, which may include your broker or other financial
intermediary, newspapers, financial information websites and the Marconi
website.
IS THERE A LOW-COST OR FREE DEALING SERVICE?
If you hold shares and, if applicable, warrants through the nominee, a
commission-free postal dealing service allowing you either to sell all (but not
some) of your new shares and warrants or to buy new shares (but not warrants)
free of commission (0.5% stamp duty reserve tax will be payable by you on any
purchase of shares) will be made available to you. You may only use this service
to buy or sell on one occasion only. If you use the service to buy shares you
may only do so if the value of shares purchased is between L100 and L1,000. This
service will be operated by Computershare Investor Services PLC on behalf of
Marconi Corporation plc from the date of listing of the new shares and warrants
up to 29 August 2003 or such earlier date as may be notified to you on not less
than two weeks' notice. Details of this service will be sent to you when you are
notified of the number of new shares and warrants allocated to you. The dealing
service will not be available if admission of the shares and warrants to the
Official List of the UK Listing Authority and to trading on the London Stock
Exchange does not take place upon the restructuring becoming effective.
WHAT DO I HAVE TO DO NOW?
You are not required to take any action in order to be allocated new shares and,
if applicable, warrants in the restructuring. In due course you will have shares
and, if you are eligible, warrants credited to your CREST account or you will be
notified of the number of new shares and, if applicable, warrants held on your
account by the nominee, unless you are under 18 or in a jurisdiction outside the
United Kingdom or the United States which prevents this (see Part 3), in which
case you will be issued with a share (and, if applicable, warrant) certificate,
or you will receive the net proceeds of sale of such shares and, if applicable,
warrants. If your new shares and, if applicable, warrants will be held on your
account by the nominee, details of the share and warrant dealing service,
further details of the nominee account and how to make donations to charity via
ShareGift will be sent to you. You will then be able to indicate what you wish
to do with your entitlement.
WILL I BE ASKED TO VOTE ON THE RESTRUCTURING?
The UK Listing Authority has granted a waiver of the provision in its listing
rules which would otherwise require the consent of Marconi plc shareholders to
the issue of the new shares by Marconi Corporation plc. Accordingly, the
restructuring is not conditional on the approval of Marconi plc shareholders.
The Board of Marconi plc, Lazard Brothers & Co., Limited ("Lazard") and Morgan
Stanley & Co. Limited ("Morgan Stanley") as joint sponsors to Marconi
Corporation plc and, for the purpose of this waiver only, Marconi plc have
confirmed to the UK Listing Authority that Marconi plc is in severe financial
difficulty. The Board has, and has confirmed to the UK Listing Authority that it
has, considered the methods to resolve Marconi plc's current financial position
and has concluded that the restructuring represents the only viable alternative
to an insolvency procedure. The Board is of the opinion, and has confirmed to
the UK Listing Authority, that unless the restructuring is successfully
concluded, Marconi plc would be forced into an insolvency proceeding and that
the restructuring preserves greater economic benefit for shareholders than any
such proceeding. The Board has been advised that, in these circumstances,
Marconi plc shareholders could not expect to receive any return from such a
procedure. The Board has confirmed that negotiations in relation to the
restructuring have made it apparent
7
PART 1 -- SOME QUESTIONS AND ANSWERS RELATING TO THE RESTRUCTURING
- --------------------------------------------------------------------------------
that the restructuring depends on there being no vote by shareholders of Marconi
plc and, therefore, it believes that it is inappropriate for shareholders of
Marconi plc to have a vote in the circumstances. The Board has confirmed to the
UK Listing Authority that, given these circumstances and having been so advised
by Lazard and Morgan Stanley, it believes that the terms of the restructuring
(including the waiver) constitute the only option that would be likely to
provide economic value for shareholders of Marconi plc and therefore, in these
circumstances, are fair and reasonable so far as shareholders of Marconi plc are
concerned. The Board has also confirmed to the UK Listing Authority that, having
taken advice from Marconi plc's legal and financial advisers, it believes that
the restructuring (including the waiver) is in the best interests of the
shareholders of Marconi plc as a whole. Lazard and Morgan Stanley have advised
the Board, and have confirmed to the UK Listing Authority that they have so
advised the Board, that it is their belief that the terms of the restructuring
(including the waiver of the requirement for Marconi plc shareholder approval)
constitute the only option that would be likely to provide economic value for
shareholders of Marconi plc and therefore, in these circumstances, are fair and
reasonable so far as shareholders of Marconi plc are concerned. In providing
this financial advice, Lazard and Morgan Stanley have taken into account the
Board's commercial assessment of the restructuring.
Lazard and Morgan Stanley are advising Marconi Corporation plc and Marconi plc
and no one else in connection with aspects of the restructuring and will not be
responsible to anyone other than Marconi Corporation plc and Marconi plc for
providing the protections afforded to their clients or for providing any advice
in connection with any aspect of the restructuring. Each of Lazard and Morgan
Stanley has given and not withdrawn its written consent to the inclusion in this
document of its name in the form and context in which it is included.
The joint co-ordinators of the syndicate banks have confirmed to the UK Listing
Authority that the majority banks will not make further finance or facilities
available to Marconi plc and that, in the event that a vote by Marconi plc
shareholders in relation to the restructuring is required, the majority banks
will remove their support thereby forcing Marconi plc into immediate insolvency.
The joint co-ordinators of the syndicate banks have also confirmed to the UK
Listing Authority that the majority banks' willingness to allow the
restructuring to proceed is dependent on the restructuring not requiring a vote
of Marconi plc shareholders to approve the restructuring and that the majority
banks are of the view that, having regard to the financial condition of the
Marconi plc group, a vote by Marconi plc shareholders is disproportionate to
Marconi plc shareholders' economic interest in the group.
In the opinion of Marconi Corporation plc, subject to the schemes becoming
effective in accordance with their terms and having regard to the facilities
available to the Marconi Corporation plc group, the working capital available to
the Marconi Corporation plc group is sufficient for the Marconi Corporation plc
group's present requirements, that is for the next 12 months following the date
of this letter.
WHAT DO I DO IF I SELL OR HAVE SOLD OR TRANSFERRED ALL OR SOME OF MY SHARES IN
MARCONI PLC ON OR BEFORE 16 MAY 2003?
The new shares and warrants will be allocated on the basis of the share register
of Marconi plc at the close of business on the last day of dealings of Marconi
plc shares on the London Stock Exchange. That date is expected to be 16 May
2003, being the last trading day before the restructuring becomes effective, but
may be subject to change. If you are no longer on the share register at this
time, you will not be entitled to receive any allocation of new shares or
warrants. If you have sold or otherwise transferred all of your shares in
Marconi plc, please send this letter, together with the documents enclosed, at
once to the purchaser or transferee or to the stockbroker, bank or other agent
through whom the sale was effected for onward transmission to the purchaser or
transferee.
8
PART 2 -- UNITED KINGDOM AND UNITED STATES TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
CERTAIN UK TAX CONSIDERATIONS
The following comments are of a general nature; they are included only for
information purposes and are not intended to be legal or tax advice. In
particular, they do not address the position of persons resident for tax
purposes in jurisdictions other than the UK or who hold their shares as trading
stock. You should consult your own tax advisers with respect to the possible UK
tax consequences of receiving the new shares and the warrants. Further
discussion of certain UK tax considerations relating to ownership of the new
shares and warrants is set out in the UK Taxation section of the prospectus.
Tax consequences of receiving new shares and warrants
The receipt of new shares and warrants will be treated as a part disposal of
your Marconi plc shares which may, depending on your circumstances and the
availability of applicable exemptions or reliefs, result in an allowable loss or
a chargeable gain for the purposes of UK tax on capital gains.
The disposal will be treated as being for the market value of the shares and
warrants received and the proportion of the base cost in the Marconi plc shares
which is allowed as a deduction from the disposal proceeds shall be:
A/(A + B), where:
A = the market value of your new shares and warrants; and
B = the market value of your Marconi plc shares immediately following the issue
of the new shares and warrants.
It is expected that in the majority of cases, the part disposal will result in
an allowable loss.
The UK Inland Revenue has confirmed that there will be no charge to income tax
on the receipt of new shares and warrants.
You will not be required to pay stamp duty or stamp duty reserve tax on the
receipt of the new shares and warrants. Special arrangements will be made for
the payment of stamp duty reserve tax in respect of ADRs.
Notwithstanding that you will be treated as making a part disposal of your
Marconi plc shares for market value of the shares and, if applicable, warrants
received, you will have no base cost in the new shares received. You may realise
a chargeable gain on a sale of your new shares for market value immediately
following receipt. It is, however, anticipated that in the majority of cases the
allowable loss arising on the part disposal would be sufficient to shelter this
chargeable gain, although this is dependent on the particular circumstances of
each shareholder.
The UK Inland Revenue has confirmed that the base cost of any warrants received
will be their market value on issue.
Negligible value claims in relation to Marconi plc shares
If the Marconi plc shares become of negligible value (which is anticipated to be
the case following the restructuring becoming effective), to the extent that
your Marconi plc shares are not treated as disposed of on receipt of new shares
and warrants, you may make a claim to the UK Inland Revenue that they have
become of negligible value. On your claim being accepted, you will be treated as
having disposed of your Marconi plc shares and reacquired them at market value,
thus enabling you to realise a further loss for the purposes of taxation of
chargeable gains. The disposal will be deemed to have been made in the year in
which the Revenue accepts your claim or at any earlier time specified in your
claim provided that (i) you owned the shares at that earlier time (ii) the
shares were of negligible value at that earlier time and (iii) that earlier time
is not more than two years before the beginning of the year of assessment in
which you make the claim.
Use of allowable losses
Any allowable loss you realise by making a part disposal or a negligible value
claim will be set off against any chargeable gains you have realised in the year
in which the disposal is made or, in the case of a negligible value claim, the
year specified in your claim, and to the extent that this is not possible, the
capital loss can be carried forward and set against chargeable gains arising in
subsequent years.
You should note that if you are an individual, the amount of the allowable loss
will be set against any chargeable gains you have made in the relevant year of
assessment before your annual exemption from capital gains tax
9
PART 2 -- UNITED KINGDOM AND UNITED STATES TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
(which is L7,700 for the 2002/3 tax year) for that year is taken into account.
Accordingly the benefit of the annual exemption would be lost save to the extent
that the chargeable gains exceed the allowable losses.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Although the United States federal income tax consequences of your receipt of
new shares and warrants in the restructuring are not entirely clear, it is
possible that your receipt of new shares and warrants would be deemed to be a
taxable distribution. Under this characterisation, you would be required to
include as ordinary income the fair market value of the new shares and warrants
received and you will have a basis in such new shares and warrants equal to
their fair market value on the date of the distribution. However, if Marconi plc
is ultimately liquidated and the receipt of new shares and warrants were treated
for United States federal income tax purposes as being received pursuant to the
liquidation, then the U.S. holders could be treated as recognising capital gain
rather than ordinary dividend income. YOU SHOULD CONSULT YOUR OWN TAX ADVISERS
WITH RESPECT TO THE POSSIBLE TAX CONSEQUENCES OF THE RECEIPT OF THE NEW SHARES
AND WARRANTS IN THE RESTRUCTURING, INCLUDING YOUR ABILITY TO CLAIM A LOSS FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES ON YOUR EXISTING SHARES AND/OR ADRS.
Further discussion is set out in the United States Federal Income Taxation
section of the prospectus.
10
PART 3 -- SHAREHOLDERS OUTSIDE OF THE UNITED KINGDOM
- --------------------------------------------------------------------------------
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO ANY PERSON TO
SUBSCRIBE FOR OR PURCHASE ANY SECURITIES IN MARCONI CORPORATION PLC OR ANY OTHER
ENTITY.
THE DISTRIBUTION OF THIS DOCUMENT AND/OR THE NEW SHARES AND WARRANTS MAY BE
RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. NO ACTION HAS BEEN TAKEN BY MARCONI
PLC OR MARCONI CORPORATION PLC THAT WOULD PERMIT AN OFFER OR DISTRIBUTION OF NEW
SHARES OR WARRANTS OR POSSESSION OR DISTRIBUTION OF THIS DOCUMENT OR ANY OFFER
OR PUBLICITY MATERIAL IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS
REQUIRED EXCEPT AS SET OUT BELOW. MARCONI PLC SHAREHOLDERS ARE STRONGLY ADVISED
TO CONSULT THEIR PROFESSIONAL ADVISORS AS TO WHETHER ANY LAWS OR REGULATIONS
WHICH MAY BE APPLICABLE TO THEM MAY GIVE RISE TO ANY LIABILITY OR PENALTY OR
REQUIRE THEM TO OBTAIN ANY GOVERNMENT OR OTHER CONSENT OR TO PAY ANY TAXES OR
DUTIES AS A RESULT OF THE RESTRUCTURING.
NONE OF MARCONI PLC, MARCONI CORPORATION PLC, THE ESCROW TRUSTEE, THE
DISTRIBUTION AGENT, THE PROSPECTIVE SUPERVISORS, THE REGISTRARS OR THEIR
RESPECTIVE DIRECTORS OR ANY OTHER PARTIES INVOLVED IN THE RESTRUCTURING ACCEPT
ANY RESPONSIBILITY FOR ANY LIABILITIES (INCLUDING BUT NOT LIMITED TO
CONSEQUENTIAL LIABILITIES) INCURRED AS A RESULT OF THE IMPLEMENTATION OF THE
RESTRUCTURING BY THE MARCONI PLC SHAREHOLDERS IN RESPECT OF LAWS OR REGULATIONS
APPLICABLE TO THEM.
New shares and warrants will not be distributed pursuant to the restructuring to
or to the order, or for the account or benefit, of any person where such
distribution would be prohibited by any applicable law or regulation, or so
prohibited except after compliance with conditions or requirements that are
unduly onerous. Where any determination is (or has been) required as to whether
any such condition or requirements are "unduly onerous", such determination will
be (or has been) made by Marconi Corporation plc with the advice of legal
counsel and having due regard for the number of Marconi plc shareholders that
are or may be located in the relevant jurisdiction, the value of the securities
to which such persons are or may be entitled pursuant to the restructuring, the
extent to which the requirements of the laws and regulations of such
jurisdiction as applied to the restructuring are uncertain, the nature and
extent of the risks or penalties associated with any violation of those legal or
regulatory requirements and the costs, administrative burden and timing
implications of taking such action (if any) as might permit distributions of
securities to be made in that jurisdiction (including pursuant to any available
exemptions) in accordance with applicable legal and regulatory requirements. Any
reference to whether distribution of new shares and warrants would be prohibited
except after compliance with conditions or requirements that are "unduly
onerous" should be construed accordingly.
To the extent that new shares and warrants that would otherwise be deliverable
pursuant to the restructuring cannot be delivered because of a legal or
regulatory prohibition described above, the Marconi plc shareholders that would
otherwise be entitled to receive such securities will receive cash instead. The
registrars will use reasonable endeavours to sell or procure the sale of such
securities on the best terms reasonably obtainable at the time of sale and will
pay the net cash proceeds of such sale (if any) to the relevant Marconi plc
shareholder in pounds sterling (after deduction of all applicable expenses) in
full satisfaction of the rights of such Marconi plc shareholder in respect of
such securities under the Marconi Corporation plc scheme. Any such sale shall be
deemed to have been undertaken at the request of the relevant person and none of
Marconi Corporation plc, Marconi plc, the escrow trustee, the distribution
agent, the registrars, the supervisors or any other person shall be responsible
for any loss arising from the terms or the timing of such sale or any failure to
procure a purchaser for such securities.
SECURITIES LAW RESTRICTIONS IN ITALY AND MALAYSIA
Italy
Marconi plc shareholders with a registered address in Italy will receive a share
certificate for their new shares, which will be posted to the relevant
shareholder at their own risk.
Warrants will not be distributed to Marconi plc shareholders unless (1) the
necessary regulatory clearances which have been requested by Marconi Corporation
plc are obtained or (2) the number of Marconi plc shareholders in Italy eligible
to receive warrants does not exceed 200. If either of these conditions is
satisfied at the time the restructuring becomes effective eligible Marconi plc
shareholders will receive a certificate for their warrants, which will be posted
to the relevant shareholder at their own risk. If neither of the above
conditions is satisfied at the time the restructuring becomes effective then
Marconi plc shareholders will not receive any warrants. Instead Marconi plc
shareholders will receive the net cash proceeds (in pounds sterling) of the sale
of warrants which would otherwise have been distributed to them.
11
PART 3 -- SHAREHOLDERS OUTSIDE OF THE UNITED KINGDOM
- --------------------------------------------------------------------------------
Persons in Italy should note that warrants received pursuant to an exemption to
Italian securities law relating to public offerings may not be offered, sold or
delivered nor may copies of this document or any other document relating to the
warrants be distributed in Italy except (i) pursuant to the exemptions under
Legislative Decree No 58 of 24 February 1998 and its implementations of CONSOB
Regulations or (ii) to an Italian resident who submits an unsolicited offer to
purchase the warrants.
Malaysia
Marconi Corporation plc has formed the view, on the advice of Malaysian legal
counsel, that the distribution of new shares and warrants to Marconi plc
shareholders whose registered addresses are in Malaysia would be prohibited
except after compliance with unduly onerous conditions. MARCONI PLC SHAREHOLDERS
WITH A REGISTERED ADDRESS IN MALAYSIA SHOULD NOTE THAT THEY WILL RECEIVE THE NET
CASH PROCEEDS OF SALE IN LIEU OF ANY NEW SHARES AND WARRANTS THEY WOULD
OTHERWISE BE ENTITLED UNDER THE SCHEME AS DESCRIBED ABOVE.
AUSTRALIA, LUXEMBOURG, THE NETHERLANDS AND NEW ZEALAND
Marconi plc shareholders with a registered address in Australia, Luxembourg, The
Netherlands or New Zealand will receive a share certificate for their new shares
and, if applicable, warrants, which will be posted to them at their own risk.
Set out below are certain regulatory statements relating to the securities laws
of Australia, Luxembourg, The Netherlands and New Zealand.
Australia
This document has not been, and will not be, lodged with the Australian
Securities and Investments Commission as a disclosure document for the purpose
of Australia's Corporations Act 2001. The new shares and warrants that are
referred to in this letter will be distributed or transferred pursuant to
exemptions from, or under a transaction not subject to the disclosure
requirements of Chapter 6D of the Australia's Corporations Act 2001, and may not
be offered for sale (or transferred, assigned or otherwise alienated) to
investors in Australia for at least 12 months after their allotment and issue or
transfer, except in circumstances where disclosure to investors is not required
under Chapter 6D of the Australia's Corporations Act 2001 or unless a compliant
disclosure document is prepared and lodged with the Australian Securities and
Investments Commission.
Luxembourg
The new shares and warrants that are referred to in this letter will be
distributed pursuant to exemptions from, or under a transaction not subject to
Luxembourg public requirements and may consequently not be offered or sold to
the public in the Grand Duchy of Luxembourg, and neither this document nor any
other circular, prospectus, form of application, advertisement or other material
may be distributed, or otherwise made available in, or from or published in, the
Grand Duchy of Luxembourg, except in circumstances which do not constitute a
public offer of securities.
The Netherlands
The prospectus together with the certificate of approval of the UK Listing
Authority has been submitted to the Authority for the Financial Markets
(Autoriteit voor de Financiele Markten) for mutual recognition (pursuant to
section 3, paragraph 1 in conjunction with section 5, paragraph 2 of the
Securities Transactions Supervisions Decree 1995).
New Zealand
The offer (if any) and issue of new shares and warrants is made in accordance
with the laws of the United Kingdom. This document is not a prospectus
registered under New Zealand law and does not contain all the information that a
New Zealand registered prospectus is required to contain. Marconi Corporation
plc and Marconi plc may not be subject to New Zealand law and any instrument to
be issued under the restructuring in relation to the new shares and warrants may
not be enforceable in New Zealand courts.
12
PART 3 -- SHAREHOLDERS OUTSIDE OF THE UNITED KINGDOM
- --------------------------------------------------------------------------------
OTHER JURISDICTIONS
Unless Marconi Corporation plc determines that the distribution of new shares
and/or warrants would be prohibited by any applicable law or regulation, or
would be prohibited except after compliance with conditions or requirements that
are unduly onerous, Marconi plc shareholders with a registered address in any
jurisdiction other than as mentioned above will receive a share certificate for
their new shares and, if applicable, warrants, which will be posted to them at
their own risk.
13
(MARCONI LETTERHEAD WITH LOGO)
MARCONI PLC
New Century Park
PO Box 53
Coventry
Warwickshire
CV3 1HJ
(Registered in England with registered number 3846429)
31 MARCH 2003
DEAR ADR HOLDER,
Enclosed is a letter to the shareholders of Marconi plc, outlining the proposed
restructuring of the Marconi Group. I am writing to you now, separately, to
provide you with more detailed information on how the restructuring will affect
you as a holder of American Depositary Receipts representing shares in Marconi
plc.
OVERVIEW
As described in the enclosed letter, as part of the proposed restructuring,
Marconi plc shareholders will receive new Marconi Corporation shares and
warrants to purchase further Marconi Corporation shares. The Bank of New York
(BNY), as the depositary for the Marconi plc ADR programme, will thus be
receiving Marconi Corporation shares and warrants on your behalf.
MARCONI CORPORATION SHARES AND ADRS
For every 559 Marconi plc shares in the depositary facility, BNY will receive
one Marconi Corporation share on behalf of Marconi plc ADR holders. In
accordance with the deposit agreement for the Marconi plc ADR programme, Marconi
plc and BNY have consulted with respect to this distribution of shares, and have
agreed that BNY will arrange for you to receive your pro rata share of this
distribution in the form of new Marconi Corporation ADRs.
No depositary fees will be payable in connection with the initial issuance of
these ADRs. UK stamp duty reserve tax, however, will be payable in this
connection at a rate of 1.5 per cent. of the market value of the shares
deposited into the Marconi Corporation ADR programme. BNY will, on your behalf,
sell any shares relating to fractional ADR entitlements together with such
number of additional shares to which Marconi plc ADR holders would otherwise be
entitled (on a pro rata basis) as may be necessary to cover the amount of SDRT
that is due. Any cash remaining after application of the proceeds of these sales
will be distributed to Marconi plc ADR holders on a pro rata basis.
Each new Marconi Corporation ADR will represent 10 underlying Marconi
Corporation shares. In all other respects, the terms of the new Marconi
Corporation ADRs will be substantially the same as those of the existing Marconi
plc ADRs. A summary of the material terms of the ADRs is set out in Appendix 16
of the scheme document published in connection with the restructuring. The
scheme document will be submitted to the Securities and Exchange Commission
under cover of a report on Form 6-K.
Because of US securities law restrictions, persons located in the United States
who receive Marconi Corporation shares or ADRs in the restructuring will not be
eligible for the dealing service described in the attached letter to the
shareholders of Marconi plc.
MARCONI CORPORATION WARRANTS
For every 56 Marconi plc shares in the depositary facility, BNY will receive one
warrant to purchase one Marconi Corporation share on behalf of Marconi plc ADR
holders. In accordance with the deposit agreement for the Marconi plc ADR
programme, Marconi plc and BNY have consulted with respect to this distribution
of warrants, and have determined that it is unlikely that a liquid market for
warrants will develop in the United States, and that it would be unreasonably
costly to seek to distribute warrants directly to holders of Marconi plc ADRs.
Accordingly, at an appropriate time, BNY will sell any such warrants it has
received and will distribute the net proceeds of such sale to holders of plc
ADRs, all in accordance with the deposit agreement for the plc ADR programme.
RECEIVING YOUR ADRS AND CASH
If you hold your Marconi plc ADRs through the facilities of the Depository Trust
Company (DTC), your new Marconi Corporation ADRs and any cash to which you may
be entitled will be delivered through such facilities.
If you hold your Marconi plc ADRs outside of the DTC system through an account
with The Bank of New York, your Marconi Corporation ADRs and any cash to which
you may be entitled will be delivered to you through The Bank of New York's
facilities.
If you hold your Marconi plc ADRs in certificated form, your Marconi Corporation
ADRs, along with a check in the amount of any cash to which you may be entitled,
will be mailed to the registered address that the depositary has on record for
you. You may wish to ensure that this information is up-to-date and accurate.
YOUR MARCONI PLC ADRS
You will not be required to exchange your Marconi plc ADRs in order to receive
any Marconi Corporation ADRs or cash in connection with the restructuring. Your
Marconi plc ADRs will continue to exist and will remain outstanding after the
restructuring. However, the Marconi plc ADRs are no longer listed on NASDAQ, and
the underlying shares will cease to be listed on the London Stock Exchange after
the restructuring takes effect.
Under the terms of the scheme of arrangement between Marconi plc and its
creditors, all of the assets of Marconi plc (net of the costs of administering
the scheme) will be distributed to its creditors over time. Marconi plc is
expected subsequently to be liquidated or dissolved. As there will be no
circumstances in which any value will be returned to shareholders under the
terms of the Marconi plc scheme of arrangement, your Marconi plc ADRs will be
worthless after the restructuring becomes effective.
LISTING AND TRADING OF MARCONI CORPORATION ADRS
The new Marconi Corporation ADRs will be issued to you in transactions that are
not subject to the registration requirements of the Securities Act of 1933.
Accordingly, you will be able to sell such ADRs in ordinary secondary market
transactions without restriction under that Act.
Marconi Corporation will apply to list its ADRs on NASDAQ and will use its
reasonable endeavours to effect the NASDAQ listing as soon as practicable
following the effective date of the Marconi Corporation scheme of arrangement.
It is currently expected that the NASDAQ listing will become effective in the
third calendar quarter of 2003.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Although the United States federal income tax consequences of your receipt of
cash, new ADRs and, if applicable, warrants in the restructuring are not
entirely clear, it is possible that your receipt of such cash, ADRs and warrants
would be deemed to be a taxable distribution. Under this characterisation, you
would be required to include as ordinary income the amount of any cash and the
fair market value of any ADRs and warrants received and you will have a basis in
such ADRs and warrants equal to their fair market value on the date of the
distribution. However, if Marconi plc is ultimately liquidated and your receipt
of cash, ADRs and warrants were treated for United States federal income tax
purposes as being received pursuant to the liquidation, then you could be
treated as recognising capital gain rather than ordinary dividend income. YOU
SHOULD CONSULT YOUR OWN TAX ADVISERS WITH RESPECT TO THE POSSIBLE TAX
CONSEQUENCES OF THE RECEIPT OF CASH, ADRS AND WARRANTS IN THE RESTRUCTURING,
INCLUDING YOUR ABILITY TO CLAIM A LOSS FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES ON YOUR EXISTING ADRS. Further discussion is set out in the United
States Federal Income Taxation section of the scheme document referred to above.
Yours sincerely
(-s- John Devaney)
JOHN DEVANEY
CHAIRMAN
MARCONI PLC
(LOGO)
U46020