Feltex lives as receivers seek sale

Feltex chief executive Peter Thomas is out of a job and the board of directors has been stripped of its power. Picture / Richard Robinson

Australian carpet-maker Godfrey Hirst and Auckland businessmen Craig and Graeme Turner are competing to buy Feltex and keep the company running, say its receivers.

"We do not foresee the break up or liquidation of the business," Colin Nicol of McGrathNicol+Partners said.

"It is anticipated that strong new owners will be in place from November."

Meanwhile, chief executive Peter Thomas has lost his job and the board of directors has been stripped of its power.

ANZ bank put Feltex into receivership on Friday, after negotiations with the Turner brothers over a possible rescue deal collapsed.

Nicol said the receivers desired a sale or recapitalisation of Feltex as a going concern and the Turner consortium and Godfrey Hirst had made formal expressions of interest.

"Both of those parties have been invited to submit binding offers to recapitalise Feltex."

Nicol said other unnamed parties had also made inquiries.

Thomas had been let go as CEO and financial reporting and control was under the supervision of the receivers.

"The board of directors no longer has authority to control the business," Nicol said.

Feltex, which has a New Zealand staff of about 850, would keep its doors open and normal production and trading operations would continue.

"It is business as usual," Nicol said.

The receivers aimed to keep employees working under their existing terms and conditions.

"We are committed to doing our best to secure their long-term future."

Nicol delivered a swipe against Feltex management, saying it had not disclosed that attempts to rescue the company would have left ANZ - which was owed more than A$120 million ($137 million) - short. "It was not possible to secure a sale or recapitalisation except on terms which would have required a significant debt write-off by the ANZ Bank."

The Turner brothers, owners of the Sleepyhead bedware company, said on Friday that they were making a last-minute bid to save the company but ANZ stopped taking their calls. Godfrey Hirst, which had made an offer to buy Feltex's operations for $141.8 million, was awaiting the outcome of the Turner negotiations.

Nicol said some of the rescue proposals lacked enforceable financial commitment from stakeholders and carried a risk of failure, legal problems and loss of reputation.

But he was optimistic about securing new owners and the long-term future of Feltex. "There are excellent prospects for a successful conclusion.

"Feltex's strong brands and quality are highly sought-after."

Nicol said receivers had established the support of key suppliers, which had been assured of payment.

"The uncertainty which has affected Feltex's supply chain in recent months has now been eliminated."

Feltex, Australia's second largest carpet-maker after Godfrey Hirst, listed on the New Zealand sharemarket in June 2004 at $1.70 a share. But a drop in profits, failed merger talks with Godfrey Hirst and growing debts to ANZ saw the company unravel and last week it posted a loss of $57.7 million for the year to June 30.

Trading continued after the company was put into receivership on Friday with the share price dropping to 3c.