Go-ahead for €100m Waterford Wedgwood rights issue

THE troubled luxury goods group Waterford Wedgwood came a step closer to shedding 1,800 jobs yesterday as shareholders gave the go-ahead for a €100 million rights issue to fund its restructuring.

The company, which reported full-year losses of almost €150 million last week, said technical motions to approve the fundraising were passed with strong support at yesterday’s EGM in Dublin.

The rights issue, which is considered highly unusual in financial circles because it invites shareholders to buy shares at a price higher than the current market price, will be fully underwritten by chairman Tony O’Reilly and deputy chairman Peter Goulandris. This means a company controlled by both men will step in to bridge any shortfall caused by shareholders deciding against exercising their rights to buy more shares.

The O’Reilly and Goulandris families currently own around 24.6% of the company, but their combined shareholding is likely to increase as a result of the latest rights issue.

This prospect required shareholders to vote on a so-called “whitewash” motion that would exempt Mr O’Reilly and Mr Goulandris from making a formal takeover bid for the company, as is usual when the shareholding of an individual investor or linked group of investors passes the 30% threshold. The motion was passed with 99% support.

Talks are already underway with unions on proposed job losses. The plan includes closing the Waterford Crystal plant in Dungarvan, employing 500. The plant is expected to close in September.

The company will spend around €90 million of the money raised on restructuring. €30 million will be spent on removing excess capacity at Waterford Crystal and its Rosenthal ceramics subsidiary in Germany.

A further €24 million will go on improving productivity and reducing overheads in the Waterford and Rosenthal operations.

€36 million is earmarked for achieving savings in manufacturing, retail operations, administration and warehousing at the newly-merged chinaware operations in Britain, which include the Wedgwood and Royal Doulton brands.