Monday, February 16, 2009

Waterford Wedgwood in Ireland and the UK go into Receivership

LONDON — Queen Elizabeth, the Kremlin and the White House have been customers, but in the current economic climate, luxury crystal and ceramics are a hard sell, as Waterford Wedgwood conceded Monday. The company, which is based in Dublin and whose roots go back 250 years, makes and sells crystal vases, glasses and ceramic figurines and kitchenware. It made the ball that drops each New Year’s Eve in Times Square, and its crystal chandeliers decorate Windsor Castle.

Waterford Wedgwood said recently that its 10 British units and 4 businesses in Ireland had been placed into administration, similar to bankruptcy protection in the United States, after running out of money and failing to find a buyer. The remaining subsidiaries, including those in the United States, Germany and Canada, remain unaffected. The auditor, Deloitte, was appointed as administrator of the troubled businesses, which employ 2,700, or more than half of Waterford’s 5,000 employees. The units will continue to operate until the administrator decides to sell, close or reorganize them. “I am disappointed that certain of the group’s U.K. and Irish subsidiaries have had to go into administration and receivership, but we remain optimistic that ongoing discussions will result in a buyer being found for the business,” the chief executive of Waterford, David Sculley, said.

Waterford Wedgwood was created in 1986 when the Irish crystal maker Waterford acquired the British ceramics company Wedgwood. Both companies have a rich history.
Wedgwood was founded in 1759 by Josiah Wedgwood in Stoke-on-Trent, England. Charles Darwin, who formulated the theory of evolution, married a member of the Wedgwood family in the 19th century and was able to finance his research with the help of the family fortunes. Waterford was founded in 1783 by the brothers William and George Penrose and named after the Irish harbor town where they lived. Waterford faced difficult times in 1851, when it closed because of rising taxes, but the business reopened almost 100 years later. The Irish government gave Waterford glassware as a present to each American president from Dwight Eisenhower to Ronald Reagan, who kept his jelly beans in a Waterford dish.

Takeover talks with an unidentified private equity firm failed to come to fruition Friday and a group of lenders led by Bank of America declined to suspend a so-called covenant that is part of Waterford’s loan agreement. Talks with the lenders started four months ago, and the banks agreed three times to suspend the covenant, which requires Waterford to have a certain amount of cash on hand, to give the company more time to find a buyer. The company, which generates about half of its revenue in the United States, has struggled for the last five years to return to profit by cutting costs and jobs, and by hiring designers to develop new products. Some analysts attribute Waterford’s losses to management’s reluctance to move manufacturing jobs to countries with lower labor costs, like Indonesia. The combination of high manufacturing costs, declining demand for luxury goods and a weak dollar last year overstretched the company’s finances.

Waterford, which also owns the German china company Rosenthal, is the latest retailer in Britain and Ireland to run into financial difficulties as consumers curb spending because of concern about unemployment and the first recession in 17 years.
Woolworths, a variety store which sold things like chocolate bars, and toasters, started to close stores in December after failing to secure financing. Administrators were also called in for the music retailer Zavvi; Whittard, a tea retailer; and the Mfi Group, a furniture chain. Waterford’s top shareholders, led by the chairman, Anthony O’Reilly, have repeatedly pumped more money into the company. Waterford also sought a loan from the Irish government last year but was rebuffed. The company’s shares have declined steadily since 2001 and have traded at less than one euro cent a share since 2004. Waterford Wedgwood now has a market value of about 5.35 million euros but in October had net debt of 448.9 million euros ($625.1 million).
Sales for the year that ended in April 2008 were 672 million euros, down 9.4 percent from a year earlier. The company posted a loss of 231 million euros, up from 71 million euros.
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Sales of new Waterford Wedgwood items may be failing, but the resale market of vintage and antique pieces of Waterford or Wedgwood has not been affected by the bankruptcy announcement.

See the above Wedgwood Jasperware Cobalt Lemonade Pitcher and many other antique and vintage Wedgwood pieces available at our Mall Store at:


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