IWP agrees debt deal with creditors

Existing shareholders of IWP, the indebted cosmetics and toiletries company, will be left with 10 per cent of the company's share capital following a restructuring of its debt that will see the company surrender its stock exchange listings.

Company chairman Joe Moran said yesterday that difficult negotiations with creditors had now reached a conclusion.

He said 97 per cent of the secured creditors had agreed to a capital restructuring deal. He said the agreement would allow the company to continue trading with a "strengthened balance sheet".

Under this restructuring, the company's creditors will convert €56 million of their existing debt into equity leaving them with 90 per cent of the enlarged share capital of the company.

This will reduce the company's debts from €121 million to €65 million.

However, it means that existing shareholders will own only 10 per cent of the enlarged share capital of the company.

Shareholders are being offered the option of cashing in their shares at 3.5 cent per existing ordinary share, slightly below the current trading price of four cent. "Ordinary shareholders who wish to retain their shares in the company may elect to do so," said a company statement.

The company will now apply to have its shares delisted from the Irish and London stock exchanges as part of the restructuring.

After the restructuring, the remaining debt will be broken into two tranches of €35 and €30 million.

These will be repaid five years after the restructuring is completed, although the repayment date for the second tranche may be extended.

A new board of directors will be formed, which will include current finance director Paul O'Brien. "The company will enter into termination arrangements with all directors who resign upon completion of the restructuring on terms and conditions satisfactory to the secured creditors," said the statement.

IWP will also give up the lease on its head office in Dublin's Fitzwilliam Square.

However, a "final termination and dilapidation" settlement of €240,000 will be made. The restructuring agreement is subject to further legal and financial due diligence by the secured creditors.

Adequate working capital facilities will also be needed from April 2006 onward.

As reported back in June the statement said, chief executive Jim Murphy will step down from his position.