Shareholders in Marconi may be left owning less than 1% of the fallen telecoms giant once the firm completes its long-awaited debt restructuring.

According to a report in the Financial Times newspaper, the terms of a rescue deal are likely to see banks and bondholders gain overwhelming control of the stricken telecoms equipment maker. They are owed �4bn ($6.1bn).

The report sent Marconi shares down by 30% on Friday.

Marconi warned in June that the survival package being thrashed out with banks and bondholders would lead to a "very substantial dilution in value for existing equity holders".

But the lengths to which the company was willing to go to secure a deal had been unclear.

"Negotiations are ongoing with (Marconi's) syndicate lending banks and certain bondholders in respect of the group's financial restructuring," Marconi said in a statement issued on Friday.

"Further announcements will be made in due course," it added.

Investors suffer

The deal, on which it is understood that shareholders will not be able to vote, represents a further blow for investors hit by the plunge in Marconi's stock price.

After topping 1240p in September 2000, the shares plummeted, hitting a closing low of 3.2p last month.

The shares were 30% lower at 2.52p by the close of trade on Friday.

While the firm was once seen as a champion of the new economy, set to reap huge gains as telecoms systems were expanded and upgraded, it saw its markets dry up following the collapse of the dot.com bubble.

The revenue slide left Marconi unable to pay debts run up during an ambitious international expansion programme in the late 1990s.

Deal details

The survival deal under negotiation will see banks and bondholders cancel Marconi debts in return for shares in the firm.

A syndicate of 31 banks is expected to write off about �1bn of �2.3bn owed, the Financial Times said.

The so-called "debt for equity" rescue plan is also being used by bankrupt cable firm NTL in its ongoing restructuring.