Aussies want Feltex bid answers

Godfrey Hirst finance director Jim Walsh says his firm has given the Feltex board a "very attractive" proposal. Picture / Dean Purcell

Feltex suitor Godfrey Hirst will be looking for answers on its merger proposal now Feltex's restructuring plans have been laid out.

Godfrey Hirst finance director Jim Walsh said yesterday he hoped to be able to say whether the merger was on or off in the next few weeks.

The two carpet rivals are due to meet in Melbourne on Monday to continue discussions on Australia-based Godfrey Hirst's proposal to merge their operations.

"We need to make headway now so we will be looking for some genuine progress on Monday and, on the back of that, to decide whether there's logic in proceeding," Walsh said.

Godfrey Hirst had given the Feltex board a "very attractive" proposal after netting a 5.83 per cent stake to become its largest shareholder in June.

Feltex had asked for time to complete a wide-ranging operational review that it hoped would revive its fortunes before weighing up the proposal.

On Monday, Feltex said it would axe 235 staff and close a yarn plant in Australia as a result of that review.

Walsh said Godfrey Hirst had been "more than patient" so far.

"I think to be fair to us and all shareholders we need to rule the merger in or out, and that needs to be in the near term."

The restructuring plans did not change the prospects of a merger.

"But I guess the more Feltex pushes on, and the more it changes things in its own right, it indicates the intent of the board and, to that extent, it makes a merger look less likely."

Feltex will make 205 staff redundant at its Braybook plant in Melbourne and 30 jobs will be lost at its woven carpet operation in Christchurch.

Still under review are its synthetic carpet operations in Australia, to what extent it becomes a carpet importer and the structure of its sales and marketing.

Walsh said the scale of Monday's changes was "significant".

"But it does beg the question, how you can make 200-plus people redundant and claim this will have no impact on the business?

"What were those people doing and what does that mean in terms of underlying trading levels?"

Walsh said Feltex's recent decision to switch to half-yearly rather than quarterly reporting of its financial results meant shareholders were "in the dark" as to what the $11 million it expected to save from the changes meant in terms of profitability levels.