Feltex shares suspended, but receivers confident

Shares in beleaguered carpet maker Feltex traded as low as 1c on Friday and today they are not trading at all.

The NZX suspended trading in Feltex shares today because the company's receiver, McGrathNicol and Partners, is refusing to pay the company's 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 to-ing and fro-ing between the receiver and the exchange came after the receiver expressed confidence about the company's future in a statement on Sunday.

The Australian receivers said they expected the company to be sold or recapitalised by November as a going concern rather than liquidated or broken up.

It was not clear whether a buyer would keep the company listed on the NZX, which has lost major stocks like Carter Holt Harvey in recent times.

The receivers said they had obtained the cooperation and support of Feltex's employees and key suppliers , Colin Nicol said.

"Goods and services purchased by the receivers are assured of payment. The uncertainty which has affected Feltex's supply chain in recent months has now been eliminated."

Receivers had contacted key customers for support and arrangements were being put in place to assure customers of warranty support.

Mr Nicol said the receivers had received formal expressions of interest from the New Zealand-based Turner brothers consortium and from Australian carpet company Godfrey Hirst.

"Both of those parties have been invited to submit binding offers to acquire or recapitalise Feltex. We have also received enquiries from other parties."

The receivers had also taken over running the business from the Feltex board of directors and removed chief executive Peter Thomas.

Mr Nicol said it was clear from the documents the receivers had looked that "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.

"This does not appear to have been disclosed by Feltex."

Mr Nicol said some of the proposals received by Feltex and examined by the receivers "carried high risk of non-completion, lacked enforceable financial commitments from key stakeholders, and/or involved proposals with adverse legal or reputation risks."

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.

Feltex shares closed at 3c on Friday.

- NZPA