Shock and concern has affected Waterford in the first week of the year as the New year could not have brought worse news with the Waterford Wedgwood group going into financial administration.
Ongoing negotiations with an investor failed and the continuing credit crisis meant that banks eventually lost patience with the group’s massive debts of over €400 million.
This has been a terrible blow for staff and the region generally as the Mayor pointed out the hospitality industry in the south east depends very much on Waterford Crystal with over 300,000 tourists coming annually.
This attraction will continue to be a success for it is seen as one of the must-do visits for Americans and other nationalities coming to Ireland.
Job losses have been heavy at the company in recent years, many were awaiting new finance so as to get redundancy money early this year, but now the situation is more uncertain for them too. The fear now is that the receiver can only give statutory redundancy money.
Redundancy payments had been a major negotiation point last year with additions sought to statutory and agreed, but later the firm had cash flow problems and paid off people as cash flow came into the firm.
An additional €150 million was sought from shareholders but not fully received. Major shareholders Sir Anthony O Reilly and Peter Goulandris were not willing to fully underwrite the balance as they had done before in earlier fundraisings. Attracting new investors proved difficult after the credit crunch, noted former chief executive Redmond O’Donoghue this week on national radio.
Now a receiver has been appointed and they have resigned their directorships.
It has been estimated that Sir Anthony O’Reilly and his brother-in-law Peter Goulandris could lose €400 million in their investment in the company, as the share price has slumped and been suspended from the stock exchange.
Thus not only is it a huge blow to the workers of Waterford and the local area, but also for the investors. Local shareholder investors will also have lost their investments.
On the positive side it appears that there are parties interested in buying the Waterford Crystal plants and brand. This is heartening, but we would hope that it is not just an asset stripping exercise.
A foreign investor may not have the same loyalty to Ireland, so we will hope that the new owners will have the sense to see that it is worth maintaining the Irish operation. They will be doing their investigation in the coming weeks.
It is a bad time in the luxury gifts market as the world hits a global economic downturn but with sales in excess of €100 million it is an attractive brand to have in a portfolio for a luxury products firm.
The Government we would hope would encourage Irish investors to get involved and not allow it to fall into foreign ownership too easily. The whole situation is very regrettable but there had been some inevitability before Christmas when the bank payments were not being met and a new investor was courted but no decision secured.
If the Waterford Crystal company can start with a new balance sheet, not overloaded with massive debts, then the burdens will be less than they are at present.
Waterford Stanley was rescued in the early eighties and managed to do very well, growing employment over a number of years. We hope for a similar story here.
The September credit crunch dealt the final blow but after many years of losses, falling sales and a weak dollar the omens were not good.
In the future it will be a smaller business, more tightly run and could be more adaptable. The skills, design and knowledge are in Waterford and these strengths need to be emphasised to the new buyers. Hopefully a re-invention of the company can take place.