Takeover Panel approves O'Reilly Waterford waiver

The Irish Takeover Panel has given the O'Reilly and Goulandris interests permission to acquire up to 57.63 per cent of Waterford Wedgwood following a rights issue without making an offer for the whole company.

The "whitewash waiver" was disclosed in documents proposing the €100 million rights issue, which were sent to shareholders over the weekend.

Waterford Wedgwood will offer shareholders five new shares for every three shares currently held at a price of six cents a share in the rights issue. The funds will be used, in part, to fund the proposed purchase of rival ceramics group Royal Doulton.

Shareholders will vote on the proposal and related resolutions at an extraordinary general meeting in Dublin on December 14th.

Sir Anthony O'Reilly and his brother-in-law Mr Peter Goulandris and their respective families currently control 24.64 per cent of the company.

The two men have formed a company, Birchfield Holdings Limited, which has agreed to underwrite 70 per cent of the rights issue, with finance house Davy agreeing to underwrite the balance of 30 per cent.

At the time the rights issue was first announced, the six-cent-per-share offer was a considerable discount on the 13 cents at which Waterford Wedgwood shares were trading.

However, the shares tumbled to nine cents on the day of the announcement and have since continued the downward trend. Last night Waterford Wedgwood was trading at seven cents, having dipped below the rights price earlier in the week.

Even if approved by shareholders, the rights issue will not proceed unless the company announces its "firm intention" to make an offer for Royal Doulton. Waterford Wedgwood currently owns 21.16 per cent of the Potteries firm.

The extraordinary general meeting will vote on four proposals. The O'Reilly and Goulandris interests, which are considered to be concert parties, will not vote on the motion seeking shareholder approval for the waiver. The motion will require approval by a simple majority of shareholders not aligned with the concert parties.

All shareholders will be eligible to vote on the remaining motions, including the authorisation to expand the authorised share capital by 75 per cent - a move that will dilute the holding of those shareholders who do not take up their rights.

Apart from the concert parties, the largest shareholder in Waterford Wedgwood is Bank of Ireland Asset Management, which holds an 11.7 per cent stake.

While the concert parties are unlikely to hold 57.63 per cent of the company at the end of the exercise, any holding above 49.95 will allow them to buy more shares without triggering the need to mount a full takeover, according to the document.

The underwriters have received 2.5 per cent of the amount underwritten for the first four weeks of their commitment from October 21st - in excess of €1.3 million for the O'Reilly/ Goulandris group.

They will receive a further 0.125 per cent for every full or part week until the rights issue is completed.