Waterford Wedgwood launches bond and rights issue

The Irish luxury crystal and porcelain company Waterford Wedgwood launched a EUR 165 million (GBP 115 million) bond and EUR 38.5 million rights issue on 14 November 2003 to ease its EUR 430 million ba…

The Irish luxury crystal and porcelain company Waterford Wedgwood launched a EUR 165 million (GBP 115 million) bond and EUR 38.5 million rights issue on 14 November 2003 to ease its EUR 430 million bank debt . The company has seen demand for its products plummet since the terrorist attacks on the World Trade Center and the Pentagon on 11 September 2001. Redmond O“Donoghue, the chief executive, said the company had a first “quarter from hell” in 2003 as consumer activity declined over worries about the war in Iraq. However, the EUR 12 million loss was turned around in the 2Q with operating profits of EUR 16 million and the company said that worldwide sales in September and October were up 3%. The EUR 38.5 million rights issue is in addition to a previously expected EUR 165 million bond. The 3-for-11 issue is priced at EUR 0.18 per share compared with the 14 November 2003 closing price of EUR 0.31, a discount of 42%. Chairman Sir Anthony O“Reilly, who owns 24.6% of the company with his brother-in-law Peter Goulandris, is to take up his share of the rights in full. He said 14 November 2003 he was “greatly encouraged by our improving sales trends, the signals that a meaningful recovery in US retail sales is starting to take hold, and the enhanced profit margins which should flow from our important restructuring and productivity programmes.” Standard & Poor“s has given the company a B+ long-term corporate credit rating, although the bond issue was rated lower at B-, a sub-investment grade. S&P said the ratings reflected “Waterford Wedgwood“s highly leveraged financial profile, as well as the seasonality, cyclicality, and maturity of the niche upmarket tableware markets in which it operates”. However, it added that those factors were partly offset by the group“s strong brands and geographical diversity. The restructuring was announced as the company reported a 1H loss of EUR 44.8 million after a EUR 32.7 million restructuring charge related to the closure of a ceramics factory in Stoke-on-Trent, UK announced in June 2003. This compares with profits of EUR 39.2 million in 2002. Sales in the six months to 30 September 2003 fell 14% to EUR 405 million with ceramics down 19% and crystal 15%.