The Sunday Times
OCUS
F 17.05.15
Psaros’s KPS has restored theprestige of the Waterford Wedgwood brands and earned an estimated €350m profit from their sale
CRYSTAL AMAZEMENT solicit potential investors and buyers. The still manufactured in Ireland. It was marketing and sales. for making orange-handled scissors, and bank contacted 182 potential investors. beyond saving. Waterford, Wedgwood, Royal Doulton was one of the rst companies in Europe Only two, KPS and Golden Gate Capital, It was a very different story for the and Royal Albert operated as four to make microwave ovens. WaterfordWedgwood wasawhite elephant progressed past the preliminary stage. brand. “One of the things that people separate businesses, each with their own It started looking seriously at Golden Gate said it would be willing to said was that nobody was buying crystal marketing and distribution functions. diversi cation to high- end consumer thatbrokeabillionaire but, six yearson invest only if Waterford Wedgwood were or ceramics any more,” he said. “That There were too many warehouses, products just eight years ago, buying put into an insolvency process. Deloitte was wrong. These were four global iconic and warehouses in the wrong places. Littala, a Finnish homeware designer. was appointed receiver in January 2009. brands that sold in 80 countries.” Villemejane closed unpro table shops.“ It added ceramics companies Rorstrand from receivership, its china crisis has been The receiver obtained 78 expressions Early in the due diligence, KPS There was quadruple redundancy, if such and Royal Copenhagen in 2010 and of interest and hired JM Cazenove to run retained Pierre de Villemejane, a former a term can exist,” he said. 2012 respectively. turned intoatriumph, writes Brian Carey its sale. The bank contacted 55 interested L’Oréal executive, to look at the business. Not only did the businesses not Financially strong, the market had been parties. At the end of the process, Psaros De Villemjane previously worked with collaborate, said Villemejane, they were anticipating a deal. “I don’t think anyone largest shareholder Sir Anthony O’Reilly, was the only man standing. KPS was the KPS on a turnaround at Speedline often competing against each other. expected an acquisition of this size,” said 79, was last week battling to reach a highest and best bidder. Technologies, a US company that made There were six different enterprise Tommy Ilmoni, equity research analyst at compromise with his creditors, including After fees and charges were paid, some components for printed circuit boards. software systems, none of which talked Carnegie Investment Bank in Helsinki. an aggressive Allied Irish Banks. €82m was left over for secured lenders led When Speedline was sold in 2006, KPS to each other. WWRD will bring the company to a Waterford Wedgwood is the business by Bank of America. All told, between got back 16 times its stake.The Frenchman The new management structure “is new level in luxury consumer products. movie of dealmaker Mike that broke O’Reilly. No venture sucked shareholders, banks and bondholders, Villemejane, with a background in very ¦ at”, said Villemejane. There are Kari Kauniskangas, president and PsarAos’s life story would read like a cross more of the Irish businessman’s wealth. more than €1bn had been lost. corporate turnarounds and brands, was group vice-presidents of marketing, chief of Fiskars, said it was “abigstrategic between Wall Street and Trading Places. With brother-in-law Peter Goulandris, it the ideal man to lead WWRD. operations and finance, with sales step”, yet the deal would balance almost He grew up in Weirton, Virginia, where is estimated that O’Reilly invested €400m. On taking up the job, he confessed he managers heading up critical territories. perfectly sales at its functional divisions his father worked in the local steel mill. When Waterford Wedgwood went into was barely aware of Waterford as a brand. “It means that we can make decisions —scissors, garden tools and boats — and In 1983, the mill hit troubled times and, to receivership, that money was lost for ever. He then saw, however, how Waterford quickly. Of course we have made some its living consumer unit. The WWRD save their jobs, the workers engineered one It has been quite a swing in fortune. gured so prominently on American mistakes. Yet the worst thing we can do brands “are complementary in nature” to of America’s rst-ever employee buyouts. department store wedding lists. as a business is not make decisions.” He Fiskars’s luxury consumer brands. “We are Seven years later, Psaros went to work PSAROS has every reason to be He began to understand its innate also rationalised product lines. One of extremely excited,” added Kauniskangas. on Wall Street with Eugene Keilin, the pleased. When KPS picked up Waterford potential. This was a name that resonated the old Waterford Wedgwood’s biggest Psaros said the deal represented a same Lazard & Co banker who advised the Wedgwood, it was an unloved and heavily strongly with aspirational 25-30-year-old failings was the tens of thousands of perfect ending. WWRD brands had employees on the buyout of the steel mill. loss-making business. IT WASTHE MOST Americans, a consumer sweet spot. The stock-keeping units—product items— been purchased by a strong professional In 1998, Keilin, Psaros and David Shapiro, “It was the most shattered, poorly problem, Villemejane said, was that all that tied up tens of millions of euros of company that understood heritage. another banker, formed KPS Capital run business we had encountered in 20 SHATTERED, POORLYRUN the company’s brands, and Waterford in working capital. The deal was also welcomed by Partners to save industrial businesses and years, and that is really saying something, particular, were “overly reliant on the Last year sales grew by 7% to $450m Waterford chamber of commerce. The make money. Lots of money. because we turn around underperforming, BUSINESS WE HAD bridal market”. The product was something (€394m). “There is nothing that we did Waterford Crystal brand is still hugely Last week, KPS sold WWRD, the owner distressed business,” said Psaros last week. that people bought only one day or that the previous owners could not have important to the city. House of Waterford of Waterford Crystal and china brands “That is what we do.” SEEN IN 20 YEARS — received one day in their lives, he said. done,” said Psaros. “You can say that they Crystal opened in 2010 as a visitor centre, Waterford Wedgwood, Royal Doulton KPS bought the business at the height The challenge was to create a range of had debt and pension liabilities, but at retail outlet and a manufacturing facility and Royal Albert, to Fiskars, Finland’s of the nancial crisis, when “no Irishman, AND WE TURN AROUND gifting opportunities that people could the ebitda [earnings before interest, tax, which makes high-end pieces such a oldest company, for €410m. KPS had Englishman or Scotsman” was interested, buy “every day”. Waterford broadened depreciation and amortisation] level, they chandeliers and sports trophies. bought the brands from receivers Deloitte he said. “People say that the company was DISTRESSED BUSINESSES its product range beyond drinkware, and were burning $100m a year. WWRD is “How many private equity companies in 2009 for €107.5m. It also took a €50m a victim of the nancial crisis. It wasn’t. into jewellery and interiors. now making $50m a year.” would invest in something like that?” dividend from the group in 2013. “This was a business that was going Villemejane said the task was to Psaros said, by late 2014, KPS had asked Psaros. Waterford chamber chief Psaros would not reveal the return from under anyway. Businesses don’t end up KPS nally got its hands on the business “contemporise” while keeping the deep-cut brought WWRD “as far it could” and executive Nick Donnelly said Fiskars selling WWRD, but said it was a “stunning” in trouble — they are managed into the in April 2009, setting up a new company, crystal “DNA” of the brand. It hired outside hired Goldman Sachs to nd a buyer. After commitment to the brand was “positive, result. Before accounting for any debt in ditch,” added Psaros. WWRD, to buy the assets. The Waterford designers such as interiors consultant Jo his rst meeting with Fiskars, he “knew not just in terms of the economy but the business, which was relatively modest, Waterford Wedgwood was well on the crystal factory was “awful”, said Psaros, Sampson to “push the boundaries”. The immediately” the Finns would bid most. also tourism”. KPS made a pro t of €350m. way into the ditch when Psaros and his one of the worst manufacturing facilities brands had the cache but not the margins of The company started out as a foundry Among the visitors to Waterford last Its timing was pithy. As Psaros admitted colleagues rst looked at the books in he had ever seen in his life. luxury products. Psaros said that, unusually in the village of Fiskar 366 years ago. It month were Psaros’s parents, who left to being “euphoric” about the outcome of September 2008. After a failed rights By the time the receivers came in, even for KPS, every part of the business has been listed on the stock exchange with a crystal American football. Their son the sale, Waterford Wedgwood’s former issue, Waterford appointed Lazard to just one product line, Lismore,was had to be xed: manufacturing, distribution, since 1915. Fiskars is perhaps best known has left Waterford with an awful lot more.
The supply of the material by The Publisher does not constitute or imply any endorsement or sponsorship of any product, service, company or organisation. Material may not be edited, altered, photocopied, electronically scanned or otherwise dealt in without the written permission of The Publisher. Times News Paper, News UK & Ireland Ltd, 1 London Bridge Street, London SE1 9GF email: [email protected]. Reprinted with permission by Media Licensing Co. tel: 0207 501 1085.