Wellington, DC, August 8, 2006--With Feltex's books open to a rival suitor, Godfrey Hirst says it will not raise its bid for the struggling carpet-maker and could yet walk away, according to Stuff.co.nz.
Feltex confirmed yesterday that Graeme and Craig Turner, the millionaire brothers whose family owns bedding company Sleepyhead, could do due diligence before a potential rescue offer.
But in the absence of an alternative, better deal emerging, Feltex said it would recommend the $141.8 million Hirst offer to shareholders.
Both the Turners and Godfrey Hirst aim to complete due diligence by August 21, with the Turner brothers planning to release their proposal this month or next. They were unavailable for comment yesterday.
Godfrey Hirst finance director Jim Walsh said, however, his company had no plans to increase its offer, which would return shareholders a maximum of 12 cents a share.
"We've certainly got no inclination to increase our bid," he said. "We think it's fully priced having regard to circumstances."
Godfrey Hirst, whose offer needs 75 per cent shareholder support at a September meeting, could walk away if it found something during due diligence it did not like.
"The purpose of due diligence is to examine the business and see whether it is as represented and whether there are any issues there that you weren't aware of," Walsh said.
After due diligence and assuming approval from the Commerce Commission and Australian Competition and Consumer Commission was secured, Godfrey Hirst would review its position.
Its "fully priced and fully funded" offer was fair to shareholders, staff and Feltex creditors, including ANZ to which Feltex owed $128 million, Walsh said.
With more than 40 years of making carpets, Godfrey Hirst was best placed to improve Feltex and provide continuing investment. Mr Walsh said any decision on potential mill closures or job cuts could be months away.
Feltex shares, sold for $1.70 each in a June 2004 float, yesterday closed up 0.1c at 12.1c.
The Turners hope to raise up to $40 million, with the support of other investors, to inject into Feltex. Their plan would mean that Feltex remained listed, giving shareholders the chance to share in its future.
Judy Attenberger, National Distribution Union's national textile secretary, said the Sleepyhead proposal was hard to judge at this point. The union represents about 700 of Feltex's 890 New Zealand staff.
"People are saying they (Sleepyhead) would be the preferred option because Feltex would stay on the sharemarket. But longer-term where would it leave the employees? If you raise enough money just to keep the place going, is that going to be enough to sustain it over the long haul?"
