Former Feltex Directors May Face Legal Action

Auckland, New Zealand, July 21, 2008--Feltex's liquidator plans to push ahead with legal action against seven former directors of the failed carpet maker, according to reports.

Peri Finnigan, partner at liquidator McDonald Vague, told businessday.co.nz the claim would focus on Feltex's ongoing trading from June 2005, a financial restructure in late 2005 and failure to settle on a takeover by, or merger with, rival Godfrey Hirst in 2006.

Finnigan also said the claim would center on the Securities Commission's findings that Feltex failed to make proper disclosures to the sharemarket. McDonald Vague has previously said the claims against the directors would total more than $20 million. On Friday Finnigan said the liquidator had no additional comment on "quantum."

The ex-Feltex directors in McDonald Vague's sights are former chairman Tim Saunders, former chief executives Sam Magill and Peter Thomas, plus Craig Horricks, John Feeney, John Hagen and David Hunter.

An eighth former director, Joan Withers, who is chief executive of businessday.co.nz publisher Fairfax Media, has been advised she will not now be included in any action, McDonald Vague's latest liquidators' report says.

The directors have maintained they did nothing untoward in the lead up to Feltex's receivership in September 2006. Hagan said last year they believed action by the liquidator would prove "unfounded." And Saunders has said he was confident he acted properly at all times and in the best interests of Feltex shareholders.

Finnigan said the Auckland-based firm would only go ahead with proceedings once it was confident it could see them through. McDonald Vague was seeking financial backing for the legal action from independent parties, which she declined to name.