Celtic Linen lands a major investor
CELTIC Linen, which employs more than 380 people in Wexford, has secured private equity investment which will enable it to successfully exit examinership which it entered last September.
The entry of Causeway Capital, a private equity investor into SMEs backed by the Ireland Strategic Investment Fund, into an agreement with Celtic Linen will enable it to invest in new state of the art equipment and high quality linen 'to enhance service levels for its customers and help the business return to growth'.
The deal will mean the severing of links between the Scallan family, which founded the business in 1926, and Celtic Linen.
'It is with sadness that we see Celtic Linen move on from being a family business and that there will no longer be an ownership connection between Celtic and our family,' the shareholders said in a statement issued by Peter Scallan on behalf of himself, Dara Carberry, Bairbre Scallan, Róisín Scallan, Philip Scallan and Anita Geoghegan.
In their statement, the former shareholders said in particular 'we note Causeway's commitment to retain the jobs in Wexford, thus maintaining Celtic's major contribution to the economy of the town and its hinterland'.
The former directors said the investment by Causeway Capital is a significant opportunity for all at Celtic Linen and vote of confidence in Wexford as a place to do business.
'We are assured of the future success of the company and the people at Celtic under the leadership of Donald Campbell CEO, and Joanne Somers Chief Financial Officer.'
The investment by Causeway Capital has been approved by a court sanctioned Scheme of Arrangement. AIB Bank is the Celtic Linen Group's largest creditor and it has confirmed to the Examiner, Tom Kavanagh of Deloitte Ireland, that it intends to vote in favour of a Scheme of Arrangement proposed by the Examiner.
The proposed investment would involve Causeway Capital providing a material investment in the Celtic Linen Group in return for a write down of a portion of the Company's liabilities.
Causeway Capital's Matt Scaife said: 'Celtic Linen is a long-established Irish business with very loyal customers and a highly committed workforce. We are delighted to provide the funds needed by Celtic Linen Group to exit the examinership process as well as additional investment in the Group's operating facility in Wexford.
'We are looking forward to working with the management team, led by CEO Donald Campbell and CFO Joanne Somers, to stabilise the Group and return the business to growth.'
Mr Campbell said: 'We are very pleased to have secured this investment from Causeway Capital and look forward to working with them in the period ahead.
'On behalf of the Company, I want to thank all our customers, employees and suppliers for their continuing support over many years but particularly during this recent difficult period.
'We look forward to working with them all as we move forward and start reinvesting in the business.' Causeway Capital has been advised by KPMG and LK Shields on the transaction.
When the Group went into examinership, Mr Campbell said it was well positioned to take advantage in the upturn in the hospitality industry, it just needed investment to enable it to modernise its plant and equipment.
Celtic Linen's past high energy costs have always been a factor, but since the connection to the new natural gas supply they have been significantly reduced, making it far more competitive.
The former directors said 'Celtic Linen was founded as Celtic Laundry by our grandparents Joe and Bridget Scallan in 1926 and four generations of our family have worked in the business. One of Joe and Bridget's aims was to bring employment to Wexford, then an unemployment blackspot.
For over 90 years Celtic Linen, as a family business, has been part of the fabric of Wexford's commercial life and has been a key supplier to Ireland's hotels, industry and hospitals.
In that time the company has employed many people in both Wexford and further afield and has been a major driver in infrastructure development in Wexford, most recently manifested in its leadership in bringing natural gas to Wexford.