Business, Finance & Economics

Waterford can't hang on


DUBLIN — The Waterford you own might become even more valuable, and rare, following the collapse of Waterford Wedgwood, the Irish company that manufactures the prestigious glass products.

The failure of the company’s board of directors to find a buyer in recent months caused lenders’ patience to run out. Trading Waterford Wedgwood shares on the Irish stock exchange was suspended on Jan. 5 and David Carson, a partner in Deloitte Ireland, was appointed receiver of the heavily-indebted company’s Irish operations.

The collapse of the company is a “national disaster” for Ireland, whose international image is tied up with the quality Waterford crystal brand, said Waterford Mayor Jack Walsh.

The manufacture of Waterford Crystal in Ireland began in 1783 when George and William Penrose set up a factory in Waterford to produce “plain and cut flint glass, useful and ornamental.”

The company went out of business in 1851, just after its owners submitted a magnificent Waterford glass entry to the Great Exhibition in London.

The company was revived in 1947 with the help of Czech immigrant Miroslav Havel, who was responsible for cutting many of the most enduring pieces, including Lismore, the best-selling glass pattern in the world. Havel went from designing glassware for local pubs to engraving chandeliers that today hang in Westminster Abbey.

In 1986 Waterford acquired Wedgwood, the bone china company founded in the mid-18th century in Stoke-on-Trent, England — the future of that brand is also uncertain.

The Waterford brand is just as prominent in the United States as in Ireland and the United Kingdom. Waterford provided the glittering 12,000-pound ball that was lowered in Times Square in New York to usher in the New Year.

“We consider the ball to be one of our company’s greatest achievements,” said Pete Cheyney, Waterford Crystal’s director of communications.

Now fans of the crystal await word on whether it will be the company’s last great act.

The decline in the fortunes of Waterford Wedgwood is partly due to the weakened dollar, as 70 percent of crystal sales are in the U.S. at department stores such as Macy’s and Bloomingdales. But sales have also been sliding worldwide for some years because of changing tastes and cheaper Asian competition. After what the company called “total mayhem” in global markets in the last three months, Waterford collapsed.

The receiver’s task is to protect the Waterford Wedgwood group, which has debts of 400 million euros (about $530 million), from its creditors.

In Ireland and the U.K., a receiver or administrator may continue operating a business with a view to maximizing the value of the company's assets, sell the business, or sell part of the business while closing down the unprofitable parts. Receivership differs from the bankruptcy system in the U.S. that allows directors to retain control while a plan is worked out to resolve debts.

Carson said that Waterford Wedgwood, which employs 800 people in the southeastern Irish city of Waterford and 6,000 people worldwide, would continue to trade while he attempts to sell the company. Much of the production of Wedgwood ceramics — notably the famous blue tableware with white decorations — and of Royal Doulton dishes and figurines has already been moved to Indonesia.

The main Waterford Wedgwood shareholders, Sir Anthony O’Reilly and his brother–in-law Peter Goulandris, have seen their investments of 400 million euros (about $530 million) in Waterford Wedgwood over the years wiped out. O’Reilly and three other directors resigned from the board after the share dealing was suspended.

The chief executive of the group, David Sculley, said on the firm’s website that “we remain optimistic that ongoing discussions will result in a buyer being found for the business.” But Waterford Wedgwood lost 75.8 million euros (about $100 million) in the six months up to Oct. 4, 2008, a major factor in the breakdown of negotiations for a sale to a U.S. private equity firm.

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