Waterford receiver still seeking investors

WATERFORD GLASS: WATERFORD Wedgwood's receiver, David Carson, is continuing with his efforts to sell the business to one of two US investors, despite yesterday's closure.

The luxury crystal and china group’s banks sent Mr Carson in to take over the group at the beginning of the month after it failed several times to make loan repayments when they were due.

At that point, Mr Carson, a Dublin-based partner with accountants and consultants firm Deloitte, committed himself to, as far as possible, maintaining and selling the group as a going concern.

His efforts to keep manufacturing going at the plant failed yesterday, as he wrote to workers saying that production would cease there immediately, with the loss of 480 out of its 708 jobs.

There have been signs over the last two weeks that he is running out of the cash needed to keep it going. Waterford workers have been on a three-day week for the last fortnight, he ended phased redundancy payments to over 200 former staff this week, and laid off over 300 employees from its Wedgwood subsidiary in Britain.

While Mr Carson is keeping on 200 Waterford staff involved in customer support, back office and other roles, yesterday’s announcement means that the core of the business is gone, unless or until he can find a buyer.

His statement yesterday said that he is “continuing negotiations with interested parties with a view to a sale of the company’s assets and those discussions are focused on agreeing the terms upon which a transaction could be completed”.

He also said that yesterday’s closure and the lay-off of 480 workers does not necessarily mean the end of manufacturing at Waterford Crystal.

Mr Carson is keeping on staff whose job it is to maintain Waterford Crystal’s furnace. Shutting down and restarting this is complex and expensive.

The fact that he is keeping it going indicates that he is erring on the side of being able to sell the factory to someone who is going to restart manufacturing there.

Within days of his appointment, Deloitte confirmed that over 10 parties had approached it expressing interest in buying Waterford Wedgwood.

At this stage, it looks like just two are in the running. The first is KPS Capital, which formally announced its interest in the week the receiver moved in and subsequently met representatives of trade unions.

The second is Clarion Capital, which has not said anything formally, but which is understood to be on the verge of making a formal bid. The pair are “private equity funds”, which means that they are likely to be backed by mixture of financial institutions and other investors, for whom they must ultimately deliver a return.

Both have met representatives of Waterford Crystal’s main union, Unite, which was broadly positive after the two encounters. They gave the union grounds for believing that manufacturing can continue in Waterford. However, the business is likely to be considerably slimmed down, and employ about 300 people.

It is not clear it that is 300 out of the 708 total, or 300 out of the 400-plus manufacturing and craft workers. Either way, it seems that a sale will not see the entire crystal staff returning to work.

Mr Carson is not just selling Waterford Crystal. The group includes the British Wedgwood and Royal Doulton china manufacturers, as well as Rosenthal Porcelain in Germany.

He presumably wants to do a deal, or deals, that will involve selling all of these businesses, or as many of them as possible.

Anything that cannot be sold will presumably have to be wound up, which will effectively mean the end of the business, or the group as a whole – if it comes to that.

Mr Carson’s duty is to get as much of a return as possible for the banks, and as a result, it will be those banks that ultimately determine what happens next.