West Cork co-ops close to IAWS deal

WEST CORK co-operatives, Bandon, Drinagh, Barryroe and Lisavaird are moving closer to a deal with IAWS Co-Op for its South Western Services subsidiary based in Bandon.

But the price paid may not be the €50 million currently on the table from IAWS boss, Philip Lynch.

It has been suggested one of the wind farms, Kilgarvan, Co Kerry, is behind schedule. That could impact on projected earnings which may have been inadvertently overstated as a result.

It has also been claimed that SWS management is trying to get the shareholders to put together the required funding to keep the group independent.

In response to those claims, SWS management said: "The comments are not correct; are misleading, mischievous and we would question the intentions of the source and the timing."

The West Cork co-ops in particular feel their futures will be better served by selling out to IAWS. Dairygold, the other major shareholder, will support whatever decision the other stakeholders make about the future of SWS, it is understood.

If claims that one of the wind farms is behind schedule and that earnings were mistakenly overstated prove accurate, those twin setbacks could play into the hands of Philip Lynch who has put €50m on the table as a buyout proposition.

It is understood, however, the West Cork co-ops are moving towards the view that SWS stands to have a better future under the direction of Mr Lynch than with SWS management.

Since the deal was proposed, however, Mr Lynch has taken a 26% stake in NTR, the toll road company that is also involved in wind power and waste management.

SWS is also developing sophisticated wind farm technology which will contribute strongly to significantly higher earnings in a few years.

Mr Lynch is keen to get involved in those key areas which he regards as vital to the future of the economy.

SWS clearly saw their potential also and has made significant strides in rolling out these businesses in recent years.

Mr Lynch is thought to harbour ambitions to link up SWS's wind and waste businesses with NTR's.

Markets are at a loss to see how this can be done.

At 26%, IAWS's stake in NRT gives the co-op little real clout.

Analysts say it will also make it difficult for Mr Lynch to float off the merged IAWS/SWS combine if the deal is cleared by the co-operatives.