Waterford Wedgwood has failed in its bid to block an £18.9 million sterling (€31 million) emergency rights issue by troubled British ceramics group Royal Doulton at a reconvened extraordinary general meeting yesterday. Ciaran Brennan reports

At the e.g.m., the special resolution approving the £19 million three-for-one rights issue was passed. More than 72 million votes were cast, representing 86.78 per cent of the total number of shares in issue.Slightly more than 75 per cent of the votes cast were in favour of the resolution.

Royal Doulton needed 75 per cent approval from its shareholders for the rights issue to go ahead.

In a statement, Waterford Wedgwood, which holds 21.16 per cent in Royal Doulton, said it was voting against the resolution because it did not believe the board of Royal Doulton had acted in the best interests of shareholders in declining to accept Waterford's proposal for restructuring the company and to proceed with its own restructuring plan.

Waterford said it would acquire the Royal Albert brand and associated inventories from Royal Doulton for £24 million in cash and was willing to pool the sales and distribution operations of both companies in Australia, Canada, the US and Japan, co-ordinate personnel in UK retail distribution, share certain proprietary production expertise with Royal Doulton and leverage the combined Waterford Wedgwood/Royal Doulton procurement base which it said would yield incremental cost savings of £13-18 million per annum for Royal Doulton shareholders.

It also said it would lend £12 million to Royal Doulton at a rate below Royal Doulton's existing financing costs for three years, secured by a fixed charge over certain properties and assets.

The e.g.m., originally convened for March 8th, was adjourned for one week at the request of Waterford Wedgwood to consider its alternative proposal for restructuring Royal Doulton.

"The board of Royal Doulton concluded that the proposal submitted by Waterford Wedgwood had neither the clarity, certainty of execution or substantive merit of its existing reconstruction plan which has been developed over the course of several months in consultation with a number of outside advisers," Royal Doulton said in a statement.

The group's banks, led by HSBC, had agreed that if the rights issue was a success, they would provide new debt facilities of £30 million repayable in 2005.

"Waterford Wedgwood continues to believe that its alternative restructuring proposals are in the best interests of Royal Doulton shareholders.

"It remains willing to implement them and looks forward to continuing a productive dialogue with Royal Doulton," Waterford said.