(Recasts, adds fund manager quote paragraph 6, updates share price)
LONDON, Feb 24 (Reuters) - Troubled British engineering group Invensys Plc suffered more gloom on Monday as its shares crashed to a new all-time low as worries deepened about its recovery prospects and exposure to banking covenants.
At 1429 GMT Invensys shares were down 9.2 percent at 14-3/4 pence, the worst performer in the FTSE 100 Index. The shares have slumped 94 percent in the past three years and lost two-thirds of their value just this month, slashing Invensys' market capitalisation to about 525 million pounds ($829 million).
The latest rout was sparked on February 14, when Invensys warned core operating profit in the second half of its financial year could fall 25 percent from the first half.
Analysts said the shares were hit by doubts it will be able to make its 2004 margin targets, its pension liabilities and worries it may have to renegotiate banking covenants, despite Invensys saying it was confident it will meet its covenants "comfortably".
One fund manager was particularly bearish in his assessment.
"I'm sure the banking covenants are OK at the moment, but if things continue as they are, one does have doubts about whether or not the company will survive," said Derek Mitchell, director of UK equities at ISIS Asset Management.
Credit rating agency Moody's Investors Service on Friday cut its outlook on Invensys to negative from stable, citing weakness in certain businesses "that will prevent the company from meeting its earnings and cash flow targets for the current fiscal year and possibly beyond."
One analyst, who asked not to be named, said: "This company has been mis-managed for a long time, it's been losing competitiveness, trading is tough, and although the balance sheet has been improving, now the (banking) covenants are coming back as an issue. There is a risk."
Invensys, which was formed in 1999 when Siebe acquired diverse engineering group BTR, makes controls and automation equipment for factories, offices and homes.
The company has cut jobs and sold assets to slash debt, but has been hit by a downturn in telecoms and information technology services and a weak U.S. commercial building market.
(Additional reporting by Friedel Rother)