French crystal maker Baccarat is currently facing significant challenges as its Chinese owner, Fortune Fountain Capital, scrambles for emergency funds amid a decline in sales. In an effort to determine if the necessary funds can be raised, the court has placed Baccarat in administration. This move comes after Fortune Fountain Capital, which acquired Baccarat two years ago, found itself in liquidation due to mounting debts. The company had high hopes of capitalizing on the demand for its luxury hand-crafted sculptures, chandeliers, and tableware in the Asian market. However, the uncertainties surrounding Fortune’s financial situation have deterred banks from offering loans, despite the availability of government-backed loans during the COVID-19 pandemic.

During the first half of this year, Baccarat reported a 30% decrease in sales, which amounted to 52.2 million euros ($61.4 million). The company attributes this decline to the unprecedented global health crisis caused by the pandemic. Consequently, the Nancy commercial court has appointed two independent administrators with the objective of assessing Baccarat’s viability.

The administrators’ main task is to evaluate whether Baccarat is undergoing a severe crisis that renders normal operations impossible and puts the company at an immediate risk of collapse. Currently, Baccarat’s factory, located southeast of Nancy, is only operating at 80% capacity after enduring months of complete shutdown during the COVID-19 lockdown. Employees are growing increasingly worried about the company’s future and are urging Baccarat to secure a stable and reliable shareholder.

The situation has been further complicated by internal disputes within Fortune Fountain Capital and its subsidiary, New Anchor Limited, which oversees Baccarat’s operations. In July, the works council of Baccarat penned a letter to management expressing concerns about the lack of leadership and direction, likening the company to a “rudderless ship.”

As a result of the ongoing crisis, a scheduled shareholders’ meeting for September 17 has been postponed until the issuance of the administrators’ report. The future of Baccarat remains uncertain as the company awaits a resolution to its financial challenges and a potential change in ownership.

Useful links:
1. Baccarat Official Website
2. More about Baccarat’s financial challenges