IWP in debt deal with banks

Personal care products group IWP has agreed a restructuring of roughly €82 million of debt with its banks after a succession of breaches of covenants.

The company said the agreements would ensure it would have "sufficient" funds to see the listed company through to end March 31st, 2006.

IWP's board has agreed to suspend payment of dividends to its shareholders for the duration of the agreement.

The terms of the restructuring includes the signing of new covenants with the banks and agreement by the banks to waive action over previous breaches.

IWP was forced late last year to open negotiations with holders of loan notes and bankers, which include AIB in the Republic, after finding itself in breach of agreements with lenders over a three-month period.

The penalty for having to restructure its debts will be an additional half percentage point on the interest it is charged on its borrowings. However, sources familiar with the process said this was seen as a positive outcome. They said IWP could have faced a more significant premium following its problems staying within the terms of previous agreements.

IWP chief executive Mr Jim Murphy, said in a statement that "the conclusion of the agreement with lenders is a very positive development, which will provide a stable financial framework, allowing the company to grow earnings and further reduce debt".

Analysts have said the company's performance on the stock market would be heavily dependent on the successful conclusion of the revised funding arrangements, along with evidence of addressing a decline in profitability and debt reduction.

IWP has been selling non-core assets in recent months in an effort to reduce its debt burden, which stood at €107.2 million at the end of March 2003, the last year for which full figures are available. It spurned a management buyout offer of 44 cents per share last year but its shares have since traded below that level.