ATTORNEY GENERAL Paul Gallagher SC is examining whether the Government can underwrite some €35 million in loans to Waterford Wedgewood within the confines of EU rules on state aid to private companies.
The troubled company is understood to have told the Government in recent weeks that there would be a serious threat to the employment of more than 500 staff who remain at Waterford Crystal if it does not receive some form of financial support from the State.
With Waterford's business under sustained pressure because of the dollar's weakness, discussions are said by informed sources to be a very delicate stage. The Government was told that any such support would not be open-ended, but would be required for a particular number of years to help the group to overcome its financial crisis.
The issue will be raised by Minister for Enterprise, Trade and Employment Micheál Martin at today's meeting of the Cabinet, where the matter was also discussed last week.
It is considered unlikely that the Cabinet will accept Waterford's proposal as it stands, despite being worried about job losses. Ministers are believed to have concerns about the Government bring dragged into the closure of Waterford's factory.
An employer of 3,200 people 20 years ago, a total of 470 jobs were cut in the most recent round of redundancies at the company. Waterford Crystal's spokesman declined yesterday to confirm or deny whether any process was in train with the Government. Billionaire businessman Sir Anthony O'Reilly and his brother-in-law Peter Goulandris have spent about €250 million propping up Waterford Wedgewood in recent years. They own just over 50 per cent of its ordinary shares and 58.8 per cent of its preference shares.
The company's net debt at the start of its last fiscal year, which ended last week, was €412 million.
Peter Cameron, the man charged with leading the restructuring of the company, left his post last week with immediate effect. The company installed group director David Sculley as interim chief executive.
The alternative to some form of State aid is for the company to relocate crystal manufacturing operations to a low-cost location in eastern Europe or further afield.
Waterford Crystal chief John Foley said last year that the group employs 1,300 staff in Indonesia for the same wage cost as 90 staff in Britain, itself a cheaper labour market than Ireland.
Enterprise Ireland, the State body that supports indigenous industry, is examining the business case for Government involvement in Waterford Wedgewood.
Mr Gallagher has been asked to look at the legal implications of providing some form of State aid to the group.
Any such scheme would have to be approved by the competition directorate general of the European Commission, a body that typically frowns on state support for private companies.
However, the case has been made within Government circles that the French and German governments have, in the past, supported manufacturing operations of indigenous companies.
