Saturday 1 October 2016

KPS seeks more Irish deals after Waterford sale

Published 12/05/2015 | 02:30

The 2009 fall of Waterford Wedgwood was one of the big stories of the early period of the financial crisis. Photo: Reuters
The 2009 fall of Waterford Wedgwood was one of the big stories of the early period of the financial crisis. Photo: Reuters

US investors who have more than tripled their money turning around Waterford Wedgwood say they are in the market for more Irish deals.

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New York-based private equity company KPS bought Waterford Wedgwood for €107m after it went into receivership in January 2009.

KPS has now agreed to sell the business for €390m to Finland's Fiskars following a sale process run by Goldman Sachs.

KPS specialises in buying and managing the "turnaround" of struggling manufacturing business. The turnaround of the former Waterford Wedgwood, now renamed WWRD, is its only Irish deal to date.

"We are open for business. We would welcome an opportunity to invest in Ireland again," KPS managing director Michael Psaros told the Irish Independent yesterday.

Unlike most US private equity houses that bought here after the crash, KPS does not invest in property or loan assets, backing only manufacturing businesses.

Ireland can be a competitive manufacturing base, especially at the upper end of the market, Mr Psaros said. The bulk of Waterford Crystal is manufactured in Eastern Europe, but high end crystal, including the PGA Tour of America trophy and the People's Choice Awards for US TV, are made in Waterford.

The 2009 fall of Waterford Wedgwood was one of the big stories of the early period of the financial crisis.

The crystal and china firm owed about €800m when a receiver was appointed, including €346.5m to debenture holders and €195m to unsecured creditors.

Former billionaire Anthony O'Reilly and his brother-in-law, Peter Goulandris, lost over €500m between them when the company collapsed, having used their fortunes to prop up the business over a number of years.

The Government had to stump up €178m for nearly 1,800 former workers at the plant whose battle for pension payments was won after taking a case to Brussels.

While the global financial crisis has been blamed for the collapse of the former Waterford Wedgwood group, Michael Psaros said the business was in trouble regardless of the trading environment. "In 20 years of investing we had never seen a company so thoroughly, utterly and completely shattered.

"It would have failed even if the economy had been booming," Mr Psaros said.

However, KPS was attracted to invest in the deal because the group was able to sell into 80 markets, a radical overhaul of all aspects of the business was needed for it to trade profitably.

KPS's acquisition of Waterford Wedgwood included the group's brands but not the Irish manufacturing plant outside Waterford City.

The US firm opened a new down-town crystal plant and visitor centre in Waterford in 2010, and has invested in modern potteries in the UK.

Fiskar is a 250-year-old stock market listed firm, which owns the Royal Copenhagen homeware brand.

"The purchase price of 13 times per EBIT looks sensible to me. That's the same valuation level that Fiskars itself has," said Nordea analyst Rauli Juva.

"Fiskars seems to think they will benefit from a wider, more global brand portfolio," he said.

Irish Independent

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