Wellington, New Zealand, September 8, 2006--Feltex Carpets whose bank loans amount to 10 times its market value, would raise NZ$51 million ($33 million) selling new securities as part of a refinancing plan from an investment group.
The company would sell NZ$40 million of notes that convert to shares and NZ$11 million of rights to buy shares under the proposal from investors Craig and Graeme Turner. The Turners need to convince Australia & New Zealand Banking Group Ltd. not to wind up Feltex to try to recoup NZ$135 million of loans.
Feltex stock has plunged 81 percent this year after it breached terms of loans from ANZ Bank. The company's directors recommended the Turners' proposal in the absence of a better offer, Auckland-based Feltex said in a statement today.
Under the plan, the loans from ANZ Bank would be refinanced by a group of lenders, Feltex said, without identifying the parties. The convertible notes would be priced at 10 cents apiece, according to the statement.
Yesterday, ANZ Bank said any offer to refinance the company must be fully funded and viable. Rival carpet maker Godfrey Hirst Australia Pty this week said it won't proceed with a NZ$142 million proposal to repay bank loans and pay shareholders no more than 12 cents a share.
Feltex stock rose 1.2 cents, or 14 percent, to 10 cents at 10 a.m. in Wellington, valuing the company at NZ$14.9 million, compared with its 2004 initial public offering price of NZ$1.70 a share.
The Turners and their investor group would each hold at least 30 percent of Feltex after the rights sale. The members of the investor group, who will also underwrite the rights sale, weren't identified.
The Turners would also receive 115 million warrants over Feltex shares, exercisable within four years at 15 cents apiece. If all warrants were exercised, the Turners stake in Feltex would rise to 41 percent.
