Auckland, New Zealand, November 6, 2006--A Feltex shareholder has lodged an application at the High Court in Auckland to have shareholder activist Tony Gavigan appointed to the Feltex board so angry shareholders can get hold of documents to use in a class action, according to the Dominion Post.
Ian Hamilton lodged the application on October 27. Mr Hamilton, who owns 172,000 Feltex shares, is overseas and could not be contacted.
Mr Gavigan said lawyers representing himself and Mr Hamilton expected to be advised this week of when the application would be processed.
Mr Gavigan - an auditor - is gathering a group of Feltex shareholders to pursue legal action against several parties associated with the float of the now defunct carpet company.
Feltex is currently under the control of receivers, McGrath Nicol & Partners, and has had no directors since they all resigned on October 20.
Under section 154 of the Companies Act 1993, a shareholder can apply to the High Court to appoint a director in situations where there are none. Mr Gavigan said it was the first time a section 154 application had been made.
The action was being taken because of concerns the receivers were acting solely in the interest of their secured creditor appointee and were selling Feltex assets too cheaply, Mr Gavigan said. "My best guess is that these guys have possibly got less for the business sold as a going concern than you would have got on a breakup basis."
Being a Feltex director would also give access to documents that could be used in the class action, he said.
Receiver Colin Nicol said the sale of Feltex complied with statutory obligations in New Zealand and Australia.
The process was reviewed by an independent expert in New Zealand, Ferrier Hodgson, and legal opinions were also obtained from senior counsel in both countries.
"It's quite wrong to suggest that a break up sale would have yielded a better result," Mr Nicol said. "A break up sale would have triggered significant redundancy payments in Australia, which would have greatly reduced the sale price compared to the going concern sale outcome to Godfrey Hirst."
Mr Gavigan said he wanted the receivers to retire. "We want to take back control of this company again because there is future value in the company and many of the supporters believe that there is potential for value to be put back in."
