It is good to see buyers emerge for Waterford Crystal and we understand that the KPS firm could be a good owner and ensure a recovery. There is no doubt that the Waterford Wedgwood group will be broken up so as to pay off bank debt. Agreement had been reached to sell the German Rosenthal division. Wedgwood may also go and be sold in the UK.
A separate Waterford Crystal without the massive debts that were being carried has a better chance of survival than it did under the last owners of O’Reilly and Goulandris who were being hampered by the massive debts.
One of the reasons for the big debts was the huge sums paid in restructuring from 1997 to 2003, of which 200 million euro was paid out in exceptionals. Most of these were for factory closures as the firm had a mania for outsourcing. Lately, the capital raising in the last 5 years was also for redundancies and to pay for the losses in other parts of the group.
Weekend reports in the Sunday Times show the level of waste at the top end, with a board that was too large and not sufficiently independent. If alternative views had been given, would the group have sold off Rosenthal, not bought Royal Doulton or Stuart and kept Waterford Wedgwood together? Given the high cost of restructuring Wedgwood, would a sale have been better? In hindsight, the answer is Yes.
Rich Arabs did show interest at times in this prestigious UK heritage brand. Waterford Crystal is so slimmed down it could hardly get slimmer. The idea of the government buying the Visitors Centre was mentioned at the weekend. This would in turn mean a leaseback to the company. The bankers and receiver may agree to this option.
Foundry’s remarkable recovery
Back in the early eighties the Waterford Iron Foundry found themselves in trouble when the TMG group went under. It was bought by Frank Creuss Callaghan and Owen Conway and with some Government help made a remarkable recovery. A similar revival at Waterford Crystal could be possible if costs are tight and the case for keeping the factory in Waterford is good.
The pension issue will remain a problem that may need to be resolved in the medium term as markets recover and the Government may be able to find a package or solution. There are some who may be impatient here but these complex issues are never solved easily.
Certainly the situation looks a lot better than last week and there is a reason for some optimism but the pension issue will continue to cause concern as there are so many pensioners involved and they will need to be re assured that their situation is reasonably stable. A wind-up now would not be good, given the poor value in current financial markets and is best avoided. The Government will be asked for help in this regard.