Management buy-in takes over Waterford

Cast iron cooker and stove manufacturer Waterford Stanley has been taken over in a management buy-in which values the company at £16.85 million. About 15 employees at the company who received shares over the years under an incentive scheme will share £2.5 million, or an average of £166,600 each as part of the deal.

The management buy-in team comprises Mr Michael Laffan and Mr Gerry Currid, who have become joint managing directors of the company, and have taken a 20 per cent stake each in the operation. They have been backed by PRICOA Capital, a European investment company, which has taken a majority 60 per cent stake and by Anglo Irish Bank and Ulster Bank who have provided the loan funding.

In the equity and debt deal Pricoa has invested some £7.5 million - some £7.1 million in preferred equity and £450,000 in ordinary equity - while the management buy-in team has invested £5.4 million and Anglo and Ulster are providing loan funds of about £4 million.

Former managing director Mr Frank Cruess-Callaghan has sold his stake of just under 25 per cent for just about £4.2 million and development director Mr Owen Conway has sold his 24 per cent stake for just over £4 million. Other beneficiaries of the deal include ICC Bank and Enterprise Ireland whose 6 per cent stakes in Waterford Stanley were sold for £1 million each. Other large selling shareholders included businessman Mr Greg McCambridge who had a 17 per cent stake and former Guinness and Mahon joint managing director Mr Maurice O'Kelly who owned 8 per cent of Waterford Stanley. Anglo Irish Bank and Ulster Bank are providing loan facilities for the company which Mr Laffan said would "not add dramatically to existing interest costs".

Waterford Stanley has an annual turnover of £30 million and profits after interest costs of 5 to 10 per cent of sales, Mr Laffan said, declining to disclose the figures for the latest financial year to April 2nd 2000. The company employs 320 people in Waterford and 120 in Wexford. It main markets are in the Republic, which accounts for about 55 per cent of sales, and in Britain with some sales in continental Europe, North America and the Baltic states. Mr Laffan has come to Waterford Stanley from Bord na Mona's horticulture division where he was managing director. He was previously a managing director of Electrolux Ireland, Thorn EMI (Benelux) and chief executive of Century Communications. Mr Currid was chief executive of the Paribas banking operation in Ireland, and has worked for Citibank and in the international oil business.

Mr Laffan said he felt there were good opportunities to grow and develop the business through expanding the product range and the distribution. On employment he said the outlook was "positive". "Our intention going forward is to continue growing the business by further strengthening the brand and fully exploiting potential market opportunities", he said. Under the deal there will be opportunities for members of the management team to build up a stake in the company through a reduction in the Pricoa stake, Mr Laffan said.

Mr Cruess-Callaghan said that after 20 years building up the operation he was confident that the new management team "would continue to build the business while maintaining the traditions of quality and innovation for which Waterford Stanley is known".

Asked why he has sold his share Mr Cruess-Callaghan said "because we got a nice offer and it was time to retire". He said the deal was done "at a fair price". Pricoa, a company which provides private equity and mezzanine finance, typically invests between £4 million and £40 million (€50 million) in each of its investment. A Pricoa spokesman said it was backing a management team which it believed could grow the business by broadening the product range and expanding its distribution overseas.

Waterford Stanley was established in 1981 when Mr Cruess-Callaghan and Mr Conway bought a Wexford-based farm machinery foundry, Pierce Engineering, for £50,000. One year later they acquired Allied Ironfounders in Waterford from the receiver and the two operations formed the core of Waterford Stanley. In 1983 they bought another Wexford firm, Springs Ltd from the receiver.