IWP shares drop 10% as takeover talks dashed

SHARES in IWP dived nearly 10% yesterday after the personal-care products group dashed hopes of a takeover approach and said it was in difficult talks with its banks.

The struggling company told the stock exchange it had noted recent takeover speculation and confirmed it had spoken to two potential investment groups in relation to a possible financial restructuring.

But there was bad news for shareholders when IWP also revealed the restructuring proposals were conditional on its banks agreeing to “a significant writedown of debt” and that this consent would not be forthcoming.

“The board and the lenders have been engaged in difficult discussions regarding a restructuring of the company’s debt and capital structure. These discussions are ongoing,” the company said.

IWP said it expected to be granted an extension to the November 30 deadline previously granted by the banks to allow the company to meet its debt obligations.

The company’s banks had agreed not to enforce certain aspects of their loan agreements after the company was unable to meet some of its covenants.

The company also told shareholders that they faced fresh bad news from any further restructuring of the company’s debt and capital structure.

Restructuring was “likely to result in a significant dilution of value for the company’s shareholders,” the stock exchange statement said.

Recent speculation had linked the company with two investor groups, including a specialist British management restructuring firm. The other approach was said to have come from an internal management team.

IWP shares currently languish around the 5c level, far lower than the 44c per share offered for the company by a management buyout (MBO) team in 2003.

The company recently announced the departure of chief executive Jim Murphy, the former Golden vale boss, after less than two years in the job.

It also announced as plans to relocate its head office to Britain in an attempt to cut costs and firm up its financial position.