Wednesday, July 04, 2007

The Minnow Swims South

Next Monday, Barry O'Callaghan and his school of little fishes will hold an extraordinary general meeting to inform their stockholders that they are swimming to the Cayman Islands. Ireland is too cold for the minnow, and the warmth of the financial climate in the Caymans will do the minnow a world of good.

HM Riverdeep is going to be restructured. In search of those elusive synergies, perhaps, which would reduce the debt burden. The plan is to liquidate subsidiaries to gain $1.89 billion worth of assets. Michael McAteer has been brought on board to wind up Houghton Mifflin Riverdeep Group Holdings, Ltd. and Houghton Mifflin Riverdeep Ltd, to send some cash downstream to the part of HM Riverdeep that is high and dry.

The assets of HM Riverdeep will be transferred to Education Media and Publishing Group, where Mr. O'Callaghan will enjoy far less scrutiny than he endured in Dublin. Best of all, it will be easier for the company to make distributions to investors....that would be Mr. O'Callaghan and his colleagues, would it not?

Why make the move now, one might ask? According to a spokeswoman for HM Riverdeep, the merged entity had an "unwieldy structure" and the company wanted to "create distributable reserves in order to be in a position to do a dividend recap and return capital to shareholders."

Who are the shareholders? Mr. O'Callaghan, for the most part, and he's clearly trying to recoup some of his investment in HM Riverdeep. With the Cayman Islands best known for shady business deals and dodgy bank investments, it is looking more and more like the minnow is choking on the whale.


Anonymous said...

The Cayman deal of course was in the news last week. But have you seen the Irish Times article about the restructuring, posted on 4 July? (I've only seen a synopsis; don't have a paid subscription.) Interesting timing for a news release, given that most of the U.S. wouldn't be paying close attention that day.

O hAnnrachainn said...

My thought exactly. I was a bit shocked to see the headline in the Irish Times, considering the holiday in the US.

The restructuring put me in mind of Fruit of the Loom, which ended its days in the Caymans. A little sleight of hand, money appears, but there's no talk of debt being paid down. The HM Riverdeep spokeswoman did suggest that dividends could be paid out because the "group is trading well post the merger."

My heart goes out to the employees of Houghton Mifflin who are made to suffer, when all they did was go to work every day and do a good job.

And could you not pony up a couple of euro for a 24-hour subscription to the Irish Times? News of Riverdeep, the Taoiseach apologizing for suggesting that the whingers commit suicide...great stuff.

Anonymous said...

RE: Irish Times subscription. I'm happy to pay the 2 euros, if I could figure out how. The site seems to require a UK- or Irish-based mobile phone to do that, and I'm in the US.

Sorry to hear the path that the Caymans led to for another old and well-respected company. And thank you for the sympathy for the employees...Much of the old guard at the top has left or will be leaving soon. The rest will just have to see how this all plays out, and in the meantime keep doing our jobs.

O hAnnrachainn said...

You don't need a mobile phone, but the sign up screen is confusing -- think it was translated from the Irish.

Keep doing your job, but be ready to jump ship if HM Riverdeep goes down. Who knows, maybe Mr. O'Callaghan can pull it off.

Anonymous said...

So, what does this all say about HM pensions. Are they safe - let's hope so.

O hAnnrachainn said...

Good question -- what happened to Enron's former employees and their pensions?

It might be time to ring up the Human Resources Department and see what contingencies might have been made.

Or you might get ready to become homeless in Dublin, which is determined to provide accomodations for all. There's always the Traveller life, if you've enough savings for a caravan.