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January 31, 1989

MARCONI ESPANA TO BE LIQUIDATED, ASSETS PARCELLED OUT AMONG SPANISH MAJORS

By CBR Staff Writer

Marconi Espana SA, the troubled subsidiary of Alcatel Standard Electrica SA, is to go into liquidation as part of a restructuring plan for the professional electronics and telecommunications sector in Spain. Marconi Espana, the former ITT manufacturing unit, is mainly involved in defence electronics, and was the subject of a rescue operation in 1987, when Telefonica asked AT&T Co and L M Ericsson to put in bids to take it over so that it would no longer stand in the way of the creation of Alcatel NV (CI No 686). If Marconi had gone into receivership at that point, the Spanish government would have withdrawn its permission for job reductions at the other ITT unit, Standard Electrica, creating problems for the future of the ITT successor company Alcatel NV. In the end, half of Marconi’s employees went to AT&T-Philips Telecommunications and to Amper SA, while the other half remained with the new slimmed-down Marconi (CI No 710), and both Standard Electrica and Marconi became part of Alacatel NV. The current liquidation plan involves the creation of two new big holdings. The first will be a Spanish telecommunications group led by Telefonica’s company Amper. The second holding will be a software group which will consist of Telefonica’s software company InTel SA and the INI Group state holding company’s electronics services company, Eria. The Spanish Government’s Economic Delegation is expected to allot $20m to the Marconi staff pay-off through retirement and redundancy notices, but 450 employees will be kept on to work with Amper. Via Amper, Telefonica will take on $430m worth of business from both Inisel’s civil and military telecommunications operations, and the Ministry of Defence’s Radite project contract with Pesa Electronica SA. Telefonica will thus gain access to the hitherto virtually inaccessible defence market which the President of INI is trying to open up. The restructuring plan has been devised by Telefonica’s ex-president Luis Solana and INI’s President, Jordi Mercader, in an attempt to bring Spanish industrial politics closer to those of other European countries. Only time will tell whether the instigators of the plan have the financial expertise to overcome the complicated shares organisation within all the companies involved.

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