BUSINESS OPINION - John McManus:WATERFORD WEDGWOOD'S attempt to wrap itself in the green flag would be simply laughable, if there was not a prospect, albeit remote, that they may yet succeed in persuading the Government to guarantee some €39 million of new borrowings.
Almost as alarming as hearing the Waterford Crystal CEO John Foley likening the company's place in the Irish business firmament to Bear Stearn's significance to Wall Street, is hearing that some figures in Government are pointing out that if Waterford Crystal was an iconic French brand, then the French Government would not hesitate to prop it up and deal with the legal challenges from Brussels when the time came.
There are so many reasons why this is wrong that its hard to know where to start.
But one jumping off point is that while Waterford Crystal may well be an iconic Irish brand, the company that is actually looking for a dig out has more operations outside of Ireland than in it.
As Waterford Wedgwood never cease telling us, it is one of the "world's leading luxury lifestyle groups with four mail brands - Waterford Crystal, Wedgwood, Rosenthal and Royal Doulton.
According to the most recent set of accounts - for the six months to the end of September 2007, the Waterford Crystal division had sales of €84.9 million; just one quarter of the group's total turnover of €317 million.
The bulk of the balance was made up by the group's ceramics division which incorporates Wedgwood and Royal Doulton, two iconic English brands. This division had a turnover of €214.6 million in the first half of the year.
While all parts of the group are struggling the interim figures would seem to indicate that if anything Waterford Crystal is the best performing part of the business and profitable to boot.
It made an operating profit of €7.1 million against a loss for the group of €29.7 million in the period. Earnings before interest tax depreciation and amortisation (EBITDA) at Waterford Crystal were €12 million, compared to negative EBITDA of €15.3 million.
It is not clear how the Waterford Crystal figures split between the Irish based manufacturing operation and the outsourced manufacturing operations. And it is obvious the situation has deteriorated since September as the US economy slows and the dollar weakens.
That said it seems pretty clear that the real problem with Waterford Wedgwood lies with the ceramics business and not the crystal business. If the Waterford Wedgwood accounts reveal anything at all it is that the non-Irish brands are dragging down the iconic Irish brand.
It is also clear that the situation at the group has deteriorated to such an extent that the €167 million raised since last April to restructure the group has not been sufficient. And nor will the additional €33 million that Sir Anthony O'Reilly and his brother-in-law Peter Goulandris have committed to investing.
The group needs more cash and the Government is now being asked to guarantee an additional €39 million of debt, in effect making it the lender of last resort for the group.
It's worth noting that all Waterford Wedgwood is saying at the moment is that the State guarantee would "enable the company to complete the orderly restructuring of Waterford Crystal".
Even if the Government was to ring some cast iron commitments from Waterford Wedgwood that every penny it guarantees will be spent on Waterford Crystal, that still has the effect of freeing up some of the group's scarce resources for the restructuring of its other non-performing operations that are the real source of the problems at Waterford Wedgwood.
Rescuing quoted companies, particularly quoted companies that carry out more than three quarters of their operations outside of the State makes no sense for the Government. Or even to French government for that matter.
