Waterford Wedgwood to raise EUR 153.7 million

Luxury crystal and porcelain group Waterford Wedgwood has unveiled a plan to raise EUR 153.7 million in another effort to break out of its problems.
The loss-making group, chaired by Sir Anthony O“R…

Luxury crystal and porcelain group Waterford Wedgwood has unveiled a plan to raise EUR 153.7 million in another effort to break out of its problems. The loss-making group, chaired by Sir Anthony O“Reilly, is to raise the money by issuing new shares. It will use the funds for a three year cost-restructuring programme that will see more production moved to the Far East. Sir Anthony and his brother-in-law Peter Goulandris, who are already the group“s biggest shareholders, have agreed to purchase EUR 60 million-worth of new shares out of their own pockets. Another major shareholder, the Corporate Partners II equity fund of Lazard Alternative Investments, has agreed to buy a EUR 20.3 million tranche of the issue. Agents JPMorgan Cazenove, Davy and Lazard will attempt to place the rest of the shares on a currently depressed stock market. In a statement to the stock exchange, Waterford Wedgwood said the proceeds of the share placing “will be used to accelerate and extend the scope of the company“s cost reduction plans”. It would also finance additional marketing and advertising support and reduce indebtedness. It is the latest in a series of rescue plans for the troubled table-top goods group, whose brands include Waterford Crystal, Royal Doulton and Wedgwood. Despite the previous turnaround plans, the company still made a pre-tax loss of EUR 241.6 million for its latest year to April 2008. Its new three-year cost restructuring programme, will, the company says, go “wider and deeper across the organisation than any before it, targeting approximately EUR 78 million of annualised cost savings”. Speaking after the announcement, Sir Anthony said: “The plan will continue and accelerate the transfer of production to the group“s state-of-the-art ceramic manufacturing facility in Indonesia and to out-sourcing partners across the globe”. “This should substantially improve gross profit margins, while the equity issue will ensure that management has the necessary funds to implement the business plan, starting with the requisite working capital for the vital pre-Christmas 2008 trading period”. “The challenges facing the group remain significant, but its recently strengthened management team with proven turnaround expertise is now in place, and a cohesive and comprehensive business plan has been developed”. “Notwithstanding the prevailing challenging economic conditions, a sustainable recovery in financial performance for the group is achievable based on prudent and realistic assumptions”. “This equity issue marks the beginning of the new Waterford Wedgwood”. The group“s chief executive David Sculley said the equity issue would provide “crucial funding” to help the group unlock the potential of its brands. The company“s three year business plan will cost EUR 98.7 million, and its debt will also be reduced by EUR 45 million. In its statement, Waterford Wedgwood confirmed that its sales softened over the July-August 2008 period, but its says its current cash position is ahead of expectations, reflecting management“s current focus on cash management. “It is essential to the achievement by the group of its targeted performance for the current financial year that additional liquidity from the share issue becomes available in the envisaged timeframes”.