In what could be the last hope for local workers and an entire industrial era, an American private equity firm last night indicated its intention to buy most of Waterford Wedgwood – including the Crystal division.
New York-based KPS Capital Partners, which specialises in acquiring troubled and bankrupt companies and has €1.3billion under management, yesterday signed a letter of intent to purchase “certain” of the luxury goods group’s assets. It’s believed to be the same investor the board were in talks with up to last weekend before banks lost patience and a Receiver was called in.
The news emerged after unions had staved off an attempt by Receiver David Carson of Deloitte Ireland to close the Kilbarry Crystal factory for a week from next Monday. A three-day week is, however, on the cards.
Since the early ’90s KPS has profited from buying “distressed” manufacturing industries, and has experience in dealing ‘constructively’ with trade unions and organised labour. Though primarily US-focused, it turned around German electronics company Ebro before selling it in 2006.
Waterford Wedgwood chief executive David Sculley described the move, agreed at a midweek meeting in New York, as “a critical step forward… We commend KPS for its confidence in our company, for the enormous amount of time, effort and resources expended by KPS globally that have resulted in reaching this important stage” and “I look forward towards the successful completion of a deal,” he said.
No consideration has been mentioned but before the company sought the protection of the courts it was estimated to be worth less than €200m. The job implications remain unclear.
Determined to maximise returns to creditors, Deloitte has also been in talks with more than 10 parties as to possible takeovers of parts of the glass and china business, including three other potential US buyers, among them private equity groups Sun Capital Partners Inc, Hilco Consumer Capital Corp, and Oakhill Capital Partners (see panel on page 2).
Now aiming to tie up a deal before the end of the month, incorporating the “major” Waterford Wedgwood and Royal Doulton businesses – but believed to exclude property assets – Mr Carson was appointed on Monday morning after lenders, led by Bank of America (understood to be owed around €120m) declined to extend a period of grace on loan repayments amid the collapse of advanced talks with a putative investor in the States.
A partner in Deloitte & Touche, he has since been ‘working tooth and nail’ to try and save the debt-ridden group, whose liabilities exceed its €555.2m assets by €336.9m.
Some 800 jobs in Waterford – with a massive indirect economic impact also – as well as 1,900 in the UK and 5,800 elsewhere (including Germany and 1,500 in Indonesia) are in serious jeopardy unless a business ‘angel’ can be found.
When he addressed staff in a packed canteen on Monday (introduced by Crystal CEO John Foley as ‘the man now running the company’) Mr Carson was positive about the chances of selling the business as a going concern, and assured workers they would get their weekly wages until such time as his work is completed.
However, with extensive experience over 20 years in corporate restructurings, including formal insolvency proceedings and informal reorganisations, he is believed to be ‘playing hard ball’.
An unconfirmed number of workers, perhaps as many as 200, left the company in the week or weeks before Christmas under a deal that paid them statutory redundancy ‘into their hands’, with the rest to be paid weekly over a 12-month period.
However, the Receiver was refusing to pay the remaining weekly redundancy monies, maintaining that those workers have left the company and must now get in line like all the other creditors. However, 40 percent of the amount due to individuals this week was paid. Tensions are said to be running extremely high on this issue in particular.
Not alone that, but the Receiver’s staff are said to be going through the factories and offices with a fine-tooth comb, cutting out anything that costs money. They are also sending back any unopened deliveries to the company.
Main workers’ union Unite objected to an immediate week-long shut-down and asked the Receiver to compromise on a three-day week instead.
Union officials will meet local staff in The Forum next Wednesday to update them on what’s happening. Unite have engaged the assistance of Greg Sparks of financial advisers Farrell Grant Sparks, and are “encouraged” by their discussions with the Receiver to date.
“Our members remain committed to working closely with prospective purchasers of Waterford Crystal,” said Unite regional organiser Walter Cullen. “We all need to remain acutely conscious that the events unfolding are having a huge impact on workers, their families and the region.
“We also expect the Government to step up with whatever is required to ensure that Waterford Crystal maintains a manufacturing presence in the city, the natural and only possible genuine home of this iconic brand.”
The union’s regional industrial organiser Seán Kelly said the mood among employees was one of shock and dismay. “It’s come as a real bolt out of the blue to the workers – it’s a real horror story for them.” One worker described the mood at Kilbarry as militant.