THE 60 per cent stake in Waterford Wedgwood jointly held by Sir Anthony O'Reilly and his brother-in-law Peter Goulandris is likely to drop to 30 per cent or below if the troubled luxury goods firm succeeds in urgent efforts to recruit new investors.
Sir Anthony is understood to have conceded in recent times that he will have to surrender the controlling interest he shares in Waterford if the business is to secure the investment it requires to avert the immediate threat of insolvency.
The firm, which has warned that it may run out of cash without new funding, said this week that "extraordinary market conditions" meant there was "no certainty" of an investment deal.
Sir Anthony has been involved in Waterford since 1985 but his multiple investments in the business stand out as a big loss-maker.
His other interests include major shareholdings in Independent News Media (INM), Providence Resources and Lundin Mining. In common with many other billionaire investors in international markets, he is nursing significant losses on those interests.
INM stock is down 75.86 per cent in the last 12 months. Providence is down 64.28 per cent in the same period and Lundin is down 88.98 per cent.
His 2 per cent stake in food company Heinz is the largest shareholding held by an individual in that business, where he was chief for many years. Heinz shares have dropped 22.14 per cent in the past year.
While it is understood that Sir Anthony has no plans to stand down from the chairmanship of Waterford if new investment materialises, a dilution of half or more of his shared stake would significantly curtail his power within the firm.
He and his brother-in-law have invested some €400 million propping up the firm in recent years, but their combined interest is currently valued at €51 million.
Any dilution of their interest would further erode the value of that stake.
According to Waterford, new funding from the "interested institutional investors" with which it is in talks would require "as a pre-condition" a comprehensive financial restructuring.
As a result, any new investment would be larger than the €74.1 million outstanding under the €153.7 million equity-raising programme initiated last summer. Of the €79.6 million that Waterford managed to raise in that effort, Sir Anthony and Mr Goulandris contributed some €60 million.
Waterford received another reprieve yesterday when its senior lenders agreed to extend until next Friday their forbearance in respect of a test of banking covenants that arises due to its failure to make an €8.2 million debt payment that fell due last Monday. Such a test is required in light of a "cross-default" triggered when the debt payment was not made.
The initial period of forbearance came to an end yesterday. As talks with potential investors continue, the company and its lenders are discussing the possibility of a further extension to the forbearance period that ends next Friday.
"Assuming progress regarding new investment in the company continues to be made, the directors have reason to believe these senior lender discussions will reach a satisfactory conclusion," Waterford said.
The company, whose pretax losses widened in the first half of its fiscal year to €63.2 million from €49.9 million, has raised a total of €854.6 million since 2003 through share placings, a bond issue and asset disposals. Its total net debt currently stands at €448.9 million.
Waterford has said the additional funding is required to execute a new business plan, which follows numerous jobs cuts and plant closures as the firm tries to forge a viable future for itself by shifting manufacturing to low-cost locations.
