Wellington, New Zealand, July 5, 2006--An unidentified investor, believed to be Talley's Fisheries, has pulled out of a deal to recapitalize struggling carpet maker Feltex, according to Stuff.co.nz.
Chairman Tim Saunders said Feltex was still confident of finding an investor and had been approached by more than one interested party.
On June 23 it announced that a successful capital raising was "fundamental to the future of the company" and that it was negotiating with an investor that was looking to underwrite the capital raising. The investor had begun due diligence, but Feltex said yesterday that the unnamed company had since sought to revise its proposal in ways the board believed would have been unfair to shareholders.
Fronting to the media for the first time since June 23, Mr Saunders said Feltex would "find an investor to underwrite (a share issue) or an investor to come in in some form or another".
He also indicated that the ANZ would be unlikely to call in the receivers if the company had not found an investor within a three-month grace period extended by the bank.
Feltex announced on Monday that the ANZ had agreed to take no action over Feltex breaching its banking covenants and that all banking facilities, including a $27.4 million term loan which expired last Saturday, would continue till September.
"If (after three months) we haven't made the progress we want we'll have to discuss it with the bank," Mr Saunders said. "I can't see why the bank would not (extend the grace period) on the basis that we are continuing to trade well. It's in their best interests."
AdvertisementAdvertisementPotential investors were "coming out of the woodwork", though Feltex was only in the early stages of talking with them. "We've not been able to really get into discussions with them because we've had this other set of discussions going on."
He would not specify the amount Feltex was looking for from an investor but said the $20 million to $60 million suggested in media speculation was "not a bad range. It's going to depend on the type of deal we do".
Carpet rivals Cavalier and Godfrey Hirst – which put a reverse takeover to Feltex last year – confirmed they were were not talking with Feltex. Hellaby Holdings and Gould Holdings have also denied any involvement.
Market watchers were not optimistic about Feltex's chances of finding a new investor. "The tone of the announcement is hopeful at best," Macquarie Equities investment director Arthur Lim said. "Given that the company has said a capital raising is fundamental to (its) future, we take this to mean now that if they are not able to get an investor on board, Feltex's time as a listed and solvent company may be very limited."
ASB Securities managing director Tim Preston said Feltex had given the same response yesterday – that it wasn't in shareholders' best interests – that it did when Godfrey Hirst looked at the company. "In hindsight it may have been definitely in the shareholders' best interests to have done something with an industry participant," he said. "You sort of wonder whether they're being realistic about the position the company's in."
