Victoria, Australia, July 29--Carpet-maker Godfrey Hirst, which took a 5.8 per cent stake in Feltex last month and requested merger talks, says such talks are yet to get off the ground. Feltex also confirmed is planning to make 42 middle management staff redundant,
Godfrey Hirst finance director Jim Walsh said yesterday at the initial early July meeting that Feltex's board had asked for time to sort out internal matters.
"We were happy to allow that time, but now we think it's time to get on with some serious discussions about a potential merger."
Feltex itself said yesterday it wanted detailed financial information from privately held Godfrey Hirst. Mr Walsh said he was happy to provide it "as long as we think there's a serious intent to fully explore the merger opportunity."
Mr Walsh would not give a time frame as to how long he would wait but said: "We don't think it needs to take months to decide whether this is likely to fly or not."
Feltex chairman Tim Saunders was unavailable for comment. However, a spokesman said Feltex had three options: going on alone with restructuring; merging part, such as its synthetic carpet business, or all its operations with Godfrey Hirst; or finding an alternative partner to merge with.
Also yesterday, Feltex is planning to make 42 middle management staff redundant - 22 of them in New Zealand - and the company has confirmed further redundancies are possible.
Feltex also surprised the market by announcing an annual profit $1 million up on guidance given just 10 days before the end of its financial year.
The non-union labour redundancies are the first phase of an operational review in the company, which yesterday announced a $13 million operating profit.
Feltex has manufacturing plants at Feilding, Foxton, Dannevirke and Kakariki, near Halcombe. The four plants employ about 400 people.
A company spokesman said the redundancies will be across all of New Zealand.
The unaudited profit result, which excludes one-off costs such as redundancy payments, is marginally better than predictions of a $12 million profit released last month, but still far below earlier forecasts of $23.9 million.
The departure of four senior executives cost the company $1.2 million, but it has not disclosed how much it paid chief executive Sam Magill to leave.
The company has also negotiated with unions to reduce the working week to four days to cut back inventory levels and workers' incomes.
Engineering Printing and Manufacturing Union assistant national secretary Rosalie Webster said workers are copping the consequences of poor management.
"We're outraged that workers are taking the sacrifice when $1.2 million was paid out to managers who may well have been part of the problem."
She said the union is not aware of any further downsizing proposals and wants to be part of building a viable industry.
"We obviously want the company to have a future and workers have been showing their loyalty."
The Feltex board is also seeking financial information from its Australian rival Godfrey Hirst about a possible merger.
In late June the privately-owned family company acquired a 5.8 percent stake in Feltex and proposed merger discussions.
Lower sales, pressure from imports and tighter margins are expected to continue in the first quarter of 2006.
