Businessman Lynchpin between two IAWS
IAWS comes in two guises - IAWS Plc and IAWS Co-op. For most, the distinction is blurred, but a world of difference exists between the two groups.
IAWS Co-op has been very much in the headlines since the start of the year due to its raid on NTR shares.
NTR is into wind energy and waste management as well as toll roads, which was the genesis of the group.
Up to late 2003, Philip Lynch was the central figure in IAWS Plc and IAWS Co-op. Since then, he resigned as chief executive of the plc and was succeeded by Owen Killian.
IAWS Plc was formed out of IAWS Co-op and Mr Lynch always retained the post of chief executive of the co-op while moving on to become full-time boss of the plc.
Despite that ongoing link and the 11% equity stake the co-op holds in the plc, the two companies are separate entities. Mr Lynch is still, however, chairman of IAWS Plc, a position he was appointed to after stepping down as chief executive. Despite Mr Lynch’s dual mandate, so to speak, developments at IAWS Plc have no bearing on the co-op. One set of actions is not motivated by the other. But because Mr Lynch is active in both companies, it can be difficult to make the distinction that really exists between the two organisations at this time.
Mr Lynch’s talks with South Western Services (SWS) on behalf of IAWS Co-op are totally separate from the plc. However, some accuse Mr Lynch of trying to repeat his success with the plc by taking the co-op public in a few years.
Crucial talks with South Western Services of Bandon are due up again today when Mr Lynch meets the board of SWS. Rumours suggest the IAWS boss has been engaged in a wing-clipping exercise with SWS management in recent discussions informing them, if that’s the right word, they had no right to question his future plans for the enlarged group.
The battle for control of the group no longer rests with SWS management.
If a deal goes through, their stake in SWS has been cut from 40% to 25%. It is not clear if the deal fails whether management then reverts to holding 40% of the independent business.
Crucial now will be Mr Lynch’s ability to sell the deal to Dairygold, Bandon, Drinagh, Barryroe and Lisavaird Co-ops.
Until recently it looked as if a deal was as good as done, but I understand that there is more than just tying up of loose ends before a final package is agreed.
When Dairygold boss Jerry Henchy got more involved in the process by appointing his own chairman to the SWS board as well as his finance director, it was thought the deal was as good as done.
Certainly that was the feeling within the IAWS camp at the time, but the truth of the matter is a bit more complicated than that. As I understand it, Mr Henchy is quite relaxed about the final outcome of the deal. He has let it be known he is happy to go along with the majority view in this regard.
In the context of the deal, the €50m due from IAWS can be taken in shares or cash at the end of three years.
With that kind of an option, all of the co-ops have covered their backs, should anything go amiss with the merger and the plans to float the group within three years as originally stated. However, it looks as if a lot of unanswered questions remain.
From the selling co-operative’s perspective, if they are considering staying independent, they will want the management’s stake in the business clarified.
If that reverts to 40%, then selling to Mr Lynch looks like the better option.
It means they get cash or a stake in an enterprise that has far greater potential down the line.
At this stage it is not clear, however, whether the debate has even got that far.
The original deadline of March 9, meanwhile, is long gone.
