The jobs of more than 220 people at the Arcon zinc mine at Galmoy, Co Kilkenny have been safeguarded after the company - 44 per cent-owned by Sir Anthony O'Reilly - agreed a major financial restructuring with its banks. Arcon shares have been suspended pending completion of the restructuring.

The restructuring is expected to involve the banks significantly extending the repayment period of Arcon's $81 million (€90 million) debt, a significant writedown of both assets and liabilities and a major rights issue aimed at boosting Arcon's balance sheet. A spokesman for Arcon would not expand on the proposed restructuring, but it seems likely that Arcon's first debt repayment of $11.1 million in June will be suspended and that repayments will recommence only when Arcon's finances are in better shape.

The Arcon spokesman would not comment on the size of the rights issue, which is being fully underwritten by Sir Anthony and others. But at its current price of €0.03, Arcon is valued at just €8.6 million so even a one-for-one rights issue at that price would raise that amount of cash.

If other shareholders do not support the rights issue, then Sir Anthony's stake in Arcon could rise significantly from the current 44 per cent under the underwriting arrangement.

Arcon has been devastated by the collapse in the price of zinc, but it is understood that the financial restructuring will allow the company operate at current zinc prices of around $800 a tonne. The extent of Arcon's problems were shown in its half-year results last September when it reported losses of €10.8 million. That situation is likely to have deteriorated significantly in the second half of last year as zinc prices have fallen from an average of $977 a tonne in the first half of 2001 to the current level of just over $800 a tonne.

In its statement yesterday, Arcon said that the full-year 2001 results could not be completed until the financial position was clarified.