THE PENSIONS of Waterford Wedgwood's workers may be under threat following the collapse of the company yesterday with debts of almost €500 million.
The group's pension scheme is more than €111 million in the red and may now have to be wound up if the company cannot be sold as a going concern. The company, however, continues to trade.
The current workers, some 800 of whom are based in Waterford Crystal at Kilbarry, would be last in line,after existing pensioners and other beneficiaries, if the scheme is wound up. They would inevitably find their pension entitlements reduced, according to pension experts.
The scheme, which is administered by trustees, has a deficit of liabilities over assets of more than €111 million, according to the group's most recent financial results. The situation is likely to have deteriorated as the stock markets in which pensions funds invest slipped further in the final quarter of 2008.
Receivers were put in place at Waterford Wedgwood's Irish operations and administrators moved into the British business yesterday after talks with a US private equity investor collapsed at the weekend.
Waterford Wedgwood had been in financial difficulty for some time. Debts stood at €448.9 million at the time of its most recent results in October. The company was told in the summer by its bankers, led by Bank of America, that it had to raise €150 million to finance working capital. Apart from €60 million from Sir Anthony O'Reilly and his brother- in-law Peter Goulandris, and €15 million from the private equity fund of UK bank Lazards, it was unable to attract new institutions and had to abort a planned private placing last month.
Deloitte, the receiver of the company in Ireland and administrator of its UK business, is in talks with three US parties to secure a sale of the majority of the assets, people close to the situation said. However, the failure of the board, led by Sir Anthony O'Reilly, to secure a buyer over the past month makes its re-emergence from receivership as a going concern in its current form unlikely.
In that event, any purchaser of parts of the business is unlikely to want to burden themselves with a significant pension fund shortfall.
Sir Anthony last night resigned with immediate effect as chairman. He was joined by Lady O'Reilly, former chief executive Redmond O'Donoghue and Patrick Molloy.
