Waterford Wedgwood asks for State loan promise
Waterford Wedgwood confirmed yesterday that it has asked the Government to guarantee loans to facilitate the restructuring of Waterford Crystal's manufacturing operations in the South East.
As well as protecting the jobs of over 500 people at the Kilbarry crystal facility, Waterford has argued Government intervention would secure one of Ireland's top visitor attractions.
The Waterford Crystal plant attracts 350,000 visitors per year, making it one of the most popular tourist attractions in the country and the most popular attraction in the South East.
Waterford is seeking State guarantees for €39m of new bank debt over a three-year period. In a statement yesterday it said: "The group's board believes that it is desirable for Ireland to maintain Waterford Crystal in Ireland. It further believes that the commitment of its investors deserves the support of the Government which is being asked for a guarantee for a three-year period, not a loan or a grant."
The principal investors in Waterford Wedgwood are deputy chairman Peter John Goulandris and chairman Sir Anthony O'Reilly, who have committed themselves to investing €33m in the company by the end of June as part of a €200m investment programme. Sir Anthony is the chief executive of Independent News & Media, which publishes the Irish Independent.
Aside from the €33m in new monies, Sir Anthony and Mr Goulandris have already invested €100m of this sum, while €50m has come from Corporate Partners II, a private equity fund managed by Lazard Alternative Investments, with the remaining €17m sourced from other investors.
Much of Waterford Crystal's product range is sold in America. But since the beginning of the credit crisis last August the value of the dollar against the euro has been falling, hitting record lows in recent weeks. This means that the real price which the plant has been able to command for its goods has been falling.
This problem has been exacerbated by falling consumer sentiment in the US, the UK and Ireland, which has hit sales.
Analysts also say that Waterford Wedgwood needs to cut its manufacturing costs. In recent years the company has pursued a rationalisation programme which has led to €70m in costs being cut from the company, reducing job numbers in the process. However, it has refused to abandon its manufacturing facility in Waterford, which has been producing crystal since the 18th century.
Although some products are now produced in low-cost countries such as China and Indonesia, the group has instead invested in modernising the Irish operations to produce better, lighter crystal products.
It has also teamed up with a raft of celebrities, particularly in the US and the UK, to rebrand much of the company's product range in a largely successful bid to improve sales.
The company said yesterday it was "gratified by the Government's constructive engagement".