Warrants may deliver 5% of IWP to Dutch institutions

A GROUP of Dutch institutional investors, including ABN and Mees Pierson, may end up with almost 5 per cent of IWP International shares if they exercise warrants they have been granted.

The warrants to acquire 1.68 million shares at 400p remain in force for the next two years and are part of the buyout of preference shares held by the Dutch institutions in IWP's Dutch subsidiary Levendaal Beheer. IWP shares are currently trading in a range between 450p and 460p but IWP chief executive, Mr Joe Moran, said that the Dutch institutions have not given any indication as to when they intend exercising their warrants.

The Levendaal household products acquisition in October 1993 cost IWP a total of £51 million and was far and away the biggest acquisition the Irish industrial holding company has made. That £51 million consideration was met through a variety of instruments, including cash, a placing of IWP shares with the Levendaal vendors an institutional placing and also the preference shares and warrants; allocated to the Dutch institutions.

Under the terms of the deal with the preference shareholders, IWP had the option to acquire a quarter of the shares in 1996, another quarter in 1997 and the remainder in 1998. Mr Moran said, however, that IWP also had the option to acquire all the preference shares in one unit and opted to do so because the cost of, borrowing to buy the shares was much less than the annual interest payments.

"We were paying a 7.5 per cent coupon on the shares and that was the equivalent of 11.5 per cent gross - we can borrow money at 6 per cent so it made sense to buy the shares. It should add about 1.5p to earnings per share," he said.

IWP has acquired the 1.75 million preference shares for Dfl 35 million (£13.4 million) and the vendors have also received the warrants to acquire 1.68 million IWP shares at 400p each.

The Levendaal acquisition has been an outstanding success for IWP and has played a large part in the strong profits growth in the past three years. Profits last year were £18.5 million and analysts are forecasting that IWP will increase profits to £24 million in the year to March 1996.