Waterford Wedgwood’s woes worsened this week as it emerged that financiers’ patience with the heavily-indebted company may be wearing thin.
As talks with institutional investors continue in the hope of raising a further €74m, the firm’s lenders have suspended a test of its banking covenants until this Friday arising from its decision not to make a due €8.2m loan payment.
Blaming the “extraordinary market conditions”, Wedgwood chiefs says there’s “no certainty” of securing the finance needed for large-scale restructuring, including hundreds of lay-offs at the Kilbarry Crystal factory, aimed at saving €78m annually. The group is forecasting a full-year pre-tax loss of €200m.
If they can get entice new equity, chairman Tony O’Reilly and his brother-in-law Peter Goulandris, who’ve poured good money after bad into the business, are facing a serious dilution of their controlling stake after an intended €153.7m fundraising drive fell nearly 50 percent short of its target figure.
Experts say the group are up against it trying to radically refinance its operations amid a global recession.
Waterford has 30 days grace to make good on a cross-default of its semi-annual payment on a €166m bond, which carries a new-10% rate of interest.
However, the plc’s board insists it has the agreement of its banks, led by Bank of America, giving it time to pursue a range of recapitalisation options. Still, the company’s credit rating has been reduced by analysts.