Cosmetics and toiletries group IWP delists from the Irish Stock Exchange today following an extraordinary general meeting yesterday.
Chairman Joe Moran told the small gathering in Jurys Hotel, Dublin, that if motions to restructure the company were not approved, IWP would enter into insolvency proceedings. In such a scenario, "shareholders would be extremely unlikely to receive any value for our shares".
The motions put to the meeting were all passed. The company's creditors will now convert €56 million of their existing debt of €121 million into equity, leaving them with 90 per cent of the enlarged share capital of the company. Existing shareholders are left with 10 per cent of the company. Those who wish can retain a very diluted shareholding in the delisted entity, or receive 3.5 cent per share.
In September 2003, the board rejected an offer to buy the company for 44 cent per share. The MBO offer was made by the then deputy chief executive, Bernard Byrne, who subsequently resigned. The committee that examined the offer, which included chairman Joe Moran, said it did not reflect "the inherent value of the group".
Yesterday Mr Moran said the proposed restructuring of the company was the only way to protect the company's core assets and to create the best prospects for employees and creditors.
He said he wished to repeat his regret that events had unfolded as they had. "This is a sad occasion, but we must do what is right. We are all shareholders and we have all suffered."
Shareholder Patrick Lee said he invested in IWP in the wake of the comment by Mr Moran in the 2005 annual report that trading was "encouraging". He wanted to know what was the basis for that comment.
Mr Moran said he did not want to be flippant but if Tipperary was beaten by Kerry by only two goals, Tipperary would consider that encouraging.
Financial director Paul O'Brien said: "The company is over-geared, that is why we are all here." He said the €16 million in fees, mostly legal fees, which the company had incurred in the course of its difficulties, would not have been enough to pay interest on the company's debt for four years, as suggested by Mr Lee.
Mr Moran said he would be selling his shares rather than retaining them. Asked after the meeting, he would not say how much he had spent for his 11.4 million shares, he said he didn't want to remember. "It's history."
He said that with hindsight the board should have accepted the MBO offer, but at the time it believed the company would make increased profits in the years ahead. The offer had included certain conditions, including performance up to a certain date, and the deal might not have gone ahead.
The company employs 1,600 people, mostly in the UK. Interim chief executive Alex Sorokin, who has 20 years experience in restructuring companies, said it was too early to say if these numbers would change.
