One of the world’s main credit bureaus downgraded Guardian Industries, one of the Grand Duchy’s largest employers, after the firm’s new corporate structure was revealed, while the company and the government say jobs in Luxembourg are safe for the moment.
The government’s economic outlook committee, which is co-chaired by economy minister Étienne Schneider and labour minister Nicolas Schmit, announced that Guardian’s Dudelange plant would qualify for Luxembourg’s short-time work compensation and early retirement schemes. The company is considering a technical overall of the facility and the government programmes would help “save 263 jobs at the site,” the economy ministry said in a statement on Wednesday.
The firm also entered into cost-saving negotiations with OGB-L union leaders, the government said.
Asked if the company plans any changes to its production capacity or staffing levels in the Grand Duchy, a Guardian spokesman at its worldwide headquarters in Michigan told Delano on Thursday that “the situation in Luxembourg has stabilised at this time.”
Also on Wednesday, Guardian announced the completion of a strategic investment and appointment of a new global chief. The glassmaker sold “a minority stake in the company to a subsidiary of Koch Industries,” Guardian said in a press statement.
Ron Vaupel, currently a Koch executive, will become president and CEO and join the board of directors of Guardian on January 1, the Michigan-based firm announced.
“Specific terms of the transaction are not being disclosed,” the company stated. Both firms are privately held.
Shortly thereafter, one of the three main credit rating agencies, Moody’s Investors Service, downgraded Guardian’s debt two levels, from Baa1 to Baa3, citing “a related debt funded distribution to existing shareholders.”
Guardian has taken a $600 million loan and opened an additional $600 million revolving credit facility, Moody’s reported. “The downgrade results from a significant increase in Guardian’s debt burden at a weak point in its operating performance,” according to the ratings agency.
Despite the immediate risk of a cash crunch, “longer term, we believe the relationship between Guardian and Koch Industries may prove strategic and beneficial,” Moody’s added.
Lower credit ratings often force companies to pay higher interest rates on their debt.
The spokesman for Guardian Industries did not confirm the shareholder payout, nor the nature of the company’s debt to Delano. “Regarding the Moody’s report, we have retained our investment grade standing and attracted a stable long-term investor,” he said. “We have been private since 1985 and do not provide further specifics or financial details.”
Moody’s noted that Guardian is one of the world’s largest providers of glass and glass products to the automotive and building sectors, with customers in more than 90 countries.
“We employ approximately 18,000 people around the world, including a little over 1,000 in Luxembourg at three locations including our European HQ,” the firm’s spokesman told Delano.