IWP shares tumble as takeover approaches break down

Shares in IWP International came under renewed pressure late yesterday after the heavily-indebted cosmetics and toiletries company indicated that it was no longer in talks with two suitors that had expressed interest in taking over the business.

The outlook for the company and its investors remained bleak after its board stressed in the statement that any structuring of its debt and capital structure was "likely to result in a significant dilution of value" for shareholders.

The stock gave up another 9.09 per cent to close at 5 cent last night after the board said the two approaches it had received were conditional on its lenders accepting a "significant" write-down of debt.

IWP finance director Paul O'Brien is understood to have been behind the latter of the approaches, which followed an expression of interest during the summer from businessman Fergal Mulchrone.

It is understood that contact with these two parties was broken off after IWP's banks indicated that they were unwilling to accept writedowns on debts that currently amount to some €82 million.

IWP, chaired by Joe Moran, has been trying to restructure its debts since May, when it warned that it would not meet earnings expectations for this year and would be forced to breach its covenants.

The company received the contacts during the course of what it describes as "difficult discussions" with the banks on the restructuring of debt and capital structure.

"In the course of the negotiations, the board received two restructuring proposals from parties other than the lenders. These proposals could not be progressed, as they were conditional, among other things, on the lenders accepting a significant writedown of debt."

The company said the talks with its banks were ongoing "and the board is expecting to be granted an extension from the lender of the waiver of any existing covenant breaches to November 30th, 2005".

Confirmation of the two approaches for the company was made only days after the well-known investor Kevin Anderson lifted his stake in the company to 4.8 per cent.

Mr Anderson previously held a stake in the company of less than 3 per cent.

He is not believed to have been involved with the approaches from Mr O'Brien or Mr Mulchrone.