Waterford shares’ deal realises €38.5m

WATERFORD WEDGWOOD has successfully completed its latest round of fundraising from existing shareholders, bringing in €38.5 million.

The company said yesterday that 88% of shareholders took up their right to buy more shares in the company at a price of 18c, which was a 38% discount on the share price of 29c when the rights issue was announced in November. Waterford shares fell since then and were trading at 23c yesterday.

Waterford said more than €188m new shares were sold under the rights issue, which allowed shareholders to buy three new shares for every 11 they already held. The company completed the fundraising by selling the shares not taken up by 12% of shareholders through a placement by Davy stockbrokers. These shares were sold at 21c and brought in over €5m of the total. The money raised will be used to repay some of Waterford’s significant debt burden, which stands at approximately €350 million. The company moved to restructure its debt package in late 2003 and also issued a €166m seven-year bond. This extended the group’s debt over a longer period and had a positive impact on cashflow by spreading interest payments.

Waterford’s debt profile now ranges between four-and-a-half and seven years, with an average profile of five-and-a-half years. Davy analyst Joe Burnell said he expected Waterford’s total debt to fall to €320 million by March 2005.

The company said its directors, which include Independent News & Media’s Tony O’Reilly, who is the group’s chairman, and deputy chairman Peter John Goulandris, took up their entitlements under the rights issue in full.

NCB analyst John Sheehan said the rights issue was modest in size and that investors in Waterford should remain cautious. He warned that the group’s exposure to the US meant that the dollar’s continuing slide against the euro would keep pressure on the company. Almost 50% of Waterford’s sales are generated in the US, while most of its manufacturing takes place in Ireland, Britain and continental Europe. Mr Sheehan said that investors should be concerned even if the dollar stabilised against the euro. A sustained recovery in the currency would be welcome, he said.

The group had so far incurred almost €25m in fees associated with refinancing its debt. NCB would maintain its “hold” rating on the stock until there was greater evidence of a recovery in Waterford’s sales. He expected group sales in the critical Christmas period to be up by 4%.