Sale of Feltex Simpler in Receivership

Wellington, New Zealand, September 26, 2006--A sale of Feltex's assets by the receiver will not have to pass a hurdle that could have tripped up previous bidders – shareholder approval, according to Stuff.co.nz. Receiver McGrathNicol is confidently anticipating it will have "strong new owners" for the carpet maker in place by the end of November. Sponsored Links It’s about you. ASB Business.Analysts said one reason for the confidence was that a sale by the receivers would not require approval of shareholders. The receiver said it had an expression of interest from both Australian company Godfrey Hirst and the New Zealand consortium led by the Turner brothers. Enquiries had also been received from other parties. Analysts guessed the other parties were private equity investors but said the Turner group and Godfrey Hirst had an advantage in that they had already seen the books. Bruce Sheppard from the New Zealand Shareholders' Association said both the Turners and Godfrey Hirst may have failed to get shareholder approval had offers from them gone ahead before receivership. He said there was now nothing for shareholders to do until they knew the result of the receivership. He said the sale of the assets would be much simpler now. A spokesman from Godfrey Hirst said the company had had talks with the receiver and would consider any options if and when they came forward. AdvertisementAdvertisementThe receiver would put "something up at some stage" to be considered, he said. Godfrey Hirst already owns a tufted wool carpet making plant in Auckland, a wool scouring plant in Napier and a spinning plant in Christchurch and it employs 490 people in New Zealand. It employs 800 staff in Australia and has six plants in Victoria. Feltex shares were yesterday suspended from trading on the NZX because the company's receiver refused to pay the share register. The NZX said the receiver applied for a trading halt just prior to market closure on Friday but the NZX did not consider that a receivership was sufficient grounds for a trading halt. "However, in this instance the receiver has confirmed that it will not be paying Feltex's share registrar, who has therefore suspended Feltex registry functions with the effect that settlement of trades in Feltex securities cannot be effected. "Because of this, NZX has no choice but to suspend Feltex securities until such time as trades are able to be settled." The receivers had obtained the co-operation and support of Feltex's employees and key suppliers , receiver Colin Nicol said on Sunday. The receiver also revealed that from the documents it had looked at on previous deals a sale or recapitalisation had required a significant debt write-off by ANZ. Proposals received by Feltex prior to the receivership "carried high risk of non-completion, lacked enforceable financial commitments from key stakeholders, and/or involved proposals with adverse legal or reputation risks." The Turners have said their deal was fully funded. Feltex, which has 1340 staff in New Zealand and Australia, has a $140 million debt to ANZ but the carpet company's directors had argued that restructuring made it a viable operation which had been trading profitably. Feltex was listed on the New Zealand stock exchange only two years ago at $1.70 a share but struck financial difficulties in 2005 due to its Australian operations.

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