South Geelong, Australia, January 12, 2006--Godfrey Hirst has again emerged as a possible saviour for troubled carpet maker Feltex, today announcing it has bumped its stake from 5.78% to 8.72%, according to ShareChat News.
No price was disclosed for the on-market purchases, but the news saw Feltex's share price rally almost 15%, or 7c, to 54c as investors bet Feltex could benefit from the increased shareholder clout of its Australian rival.
"Godfrey Hirst knows the business and investors are betting on them buying a higher stake," ABN Amro Craig's Bryon Burke said.
Feltex has had a horror run since listing in June 2004, with its share price shedding 70% percent last year following a series of profit downgrades and a senior management rout.
In the first six months of 2005, Feltex reported a net profit of $12.2 million but the second half collapsed to a profit of just $807,000. The company blamed a weaker Australian housing market, a strong New Zealand dollar, and fierce competition for its woes.
Godfrey Hirst was thwarted in its first attempt to secure control of Feltex. Talks over a possible merger - seen by Feltex's directors as more of a reverse takeover by the unlisted Godfrey - ended in an impasse in October last year.
Feltex said today it was continuing to talk about a tie-up with Godfrey Hirst.
Feltex has been a major disappointment for investors, with its shares plummeting from an issue price of $1.70 in June 2004 to a low of 39c a year later.
The carpet maker warned last month its 2006 result would be significantly affected by one-off writedowns and it would not be paying a dividend.
Godfrey Hirst was not immediately available for comment tonight.
The privately-owned company is Australia's largest carpet maker, while Feltex accounts for around 25% of carpets made in New Zealand and Australia.
