Monday, April 14, 2008

Looking into the crystal ball

Waterford Crystal wants the government to provide it with "State guarantees for €39m of new bank debt over a three-year period". Why is Waterford Crystal asking for the government to "guarantee" new bank debt? It's not a trick question, you know the answer. Yup, because no bank will go near them without the taxpayer as back-up.

The company has too much debt already. It's certainly sad, true, but at least there a few laughs reading CEO John Foley's arguments (sorry, but Irish Times and sub. reqd.) why the Irish government should back Waterford with taxpayer money:
  • They're only asking for a guarantee, not a loan or a grant (surely somebody out there would recognize that there's no risk in a guarantee and come to their aid. Surely. No?)
  • They want to stay in Ireland (aren't they great)
  • Government aid would be no different than public bail-outs of Northern Rock and Bear Stearns (yes, possible collapse of financial system or loss of luxury glass manufacturer - same thing)
  • The company "has a heritage from the mid-18th century, has been manufacturing in the city for more than 60 years. It has been a good corporate citizen throughout this time". (Possibly my favorite)
  • The company has been substantially supported by its shareholders in recent years (Duh. Maybe they should have realized earlier that the business was in trouble?)
  • They believe it's desirable for Ireland to maintain Waterford Crystal in Ireland (I agree - each shareholder should pledge to double, triple his investment with zero expectation of any return)
  • The "award-winning visitor centre", which attracts 350,000 people annually, could stay open. (I wonder if there are any other attractions that might be able to attract 350,000 people per year with €39m to spend?)
I hope the government has the sense to bid Waterford adieu. At the same time, it might not be a bad idea to just put out feelers in EU circles to see if "Waterford" must come from Waterford. You know, like Champagne has to come from the Champagne region? I'd love to see Mr. Foley's face when the government makes that announcement.