Qualceram Shires looks at all options as it talks with landlord

QUOTED BATHROOM fittings manufacturer Qualceram Shires is looking at all options, including corporate rescue or insolvency proceedings, as a result of difficulties meeting commitments to its landlord.

The company announced last month that it had entered talks with its landlord, WM Carey, and it banks seeking a waiver of some of the conditions of its lease.

Yesterday the company issued a statement saying that the property and building slumps were continuing to hit its performance.

The business depends heavily on new house construction and sales.

“Negotiations with the group’s main landlords and bankers continue, but whilst an acceptable conclusion may yet be reached, the discussions are proving challenging,” Qualceram said.

“In light of these challenges, and of the trading backdrop, the group is examining all appropriate options.”

It is understood that the appropriate options could include some form of corporate rescue or insolvency procedure, such as examinership of receivership, if the company cannot meet its debts as they fall due.

This would result in Qualceram being delisted from the Irish and London stock exchanges.

The group sold its property in Wicklow and leased it back six years ago to cash in on high land values.

Since last year it has been planning to sell other surplus property. This would result in its landlord being able to call in letters of credit for €2.6 million, which would oblige the company to pay WM Carey this sum.

The group wants WM Carey to waive this obligation. The banks are involved as they issue the letters of credit.

The difficulties have resulted in the company delaying the publication of its annual results for 2008.

Last November it said in an interim management statement that sales for the 10 months to the end of October were 30 per cent below the same period in 2007.

The group has also warned that the performance of the defined benefit pension scheme that it operates for its workers has suffered as a result of the fall in share values over the last year.

Qualceram’s main businesses are in Ireland and Britain. Eight years ago it bought British rival Shires, one of the longest-standing players in its industry.

The property and building industries in both countries have been in freefall since mid-2007. The Republic’s construction sector shrank by up to 30 per cent last year, according to some reports.

Qualceram Shire’s share price was down 2 cent or 12.5 per cent at 14 cent at the close of business in Dublin last night.