IWP faces €16m penalty on debt commitment
Due to difficult trading conditions in Britain the company will not meet profit forecasts for 2006.
Shares in IWP, a personal care products provider, fell by 33% yesterday, from 12p to 8p, after the company issued the fresh profit warning and alerted investors to the possibility of the penalty payments at the company where profits are expected to be close to €2m for 2005, from sales of €207m.
In May of 2000 IWP had a market capitalisation of €134.5m. Yesterday it was worth just €5.9m.
Yesterday, IWP chief executive J M Murphy said that in light of the current difficult trading environment, particularly in the British market, market expectations for the year to March 31, 2006, are unlikely to be achieved.
“Due to the difficult trading conditions referred to above, the board believes that the company will breach certain covenants of its present debt facilities prior to the completion of refinancing negotiations. The lenders are aware of this matter and it forms part of the refinancing negotiations, which have commenced in anticipation of the expiry of facilities on 31st March 2006. The board remains confident of the continued support of its lenders and is aiming to complete these discussions as quickly as possible,” he said.
Mr Murphy told shareholders that, if IWP is required to repay its borrowings earlier than anticipated, an additional amount of €16m could become payable. The IWP boss said this scenario could arise as a result of covenant breaches.
“This additional amount reflects an early loan note prepayment premium and the breakage cost of closing out certain unmatched financial instruments. These items will be addressed as part of the refinancing negotiations,” he said.
IWP plans to publish its preliminary results for the year to March 31, 2005 towards the end of July 2005, at which time a further refinancing update will be provided, according to Mr Murphy.
