Feltex to put Turner Bros refinancing package to bank

An 11th-hour bid for Feltex Carpets by a consortium led by Sleepyhead principals Craig and Graeme Turner will be put to the ailing carpet maker's banker, ANZ, the company said today.

The deal, which would give the consortium 30 per cent of the company and an option of a further 10 per cent, proposed a $40 million cash injection and an $11m share issue at 10 cents per share to try and resuscitate the company.

Beleaguered Feltex shareholders got some relief when the stock sprinted ahead 14 per cent on the sharemarket opening on news of the 11th hour rescue package.

The stock, initially issued two years ago at $1.70, rose 1.2 cents to 10 cents - the same price a rights issue will be issued at as part of the planned rescue package.

Feltex yesterday received an ultimatum from its bank, ANZ, that bids had to be in by 8am today. Although not stated, receivership loomed as a likely prospect if no bids were received.

"Feltex confirms that it has received an offer from the Turners for a recapitalisation and refinancing of the company," Feltex said in a statement to the stock exchange.

"The board has evaluated the proposal and submitted it to the ANZ Bank for its consideration on the basis that it is acceptable to the directors and they would be prepared to recommend it to shareholders in the absence of a superior offer.

"The company now awaits the response of the ANZ Bank."

Under the deal, the company would issue $40m of convertible notes to the Turners and a group of investors.

The consortium would also underwrite a renounceable rights at 10 cents per share to raise $10 million. Feltex shares, issued two years ago at $1.70 each, closed yesterday at 8.8 cents.

Following the rights issue, and assuming 100 per cent take-up by existing shareholders, the Turners and core investors would each hold 30.3 per cent of the company.

The Turners would also be issued with 115 million warrants. These would have a four-year exercise period at an exercise price of 15 cents and, if exercised, would raise the Turners' stake to 40.7 per cent.

The offer envisaged that a refinancing package would be arranged for Feltex from first tier lending institutions.

The Turners were expecting credit-approved letters of offer within the next two business days to enable the refinancing of Feltex's debt with the ANZ Bank, the statement said.

The offer was conditional upon the terms of these letters of offer being acceptable to them.

The deal would require the approval of 50 per cent of votes at a special meeting of shareholders to be called at the end of next month.

Feltex, which employs 1400 staff, including 550 in Australia, is laden with with debt of $135m.

A rescue attempt by Australian rival Godfrey Hirst priced at $141.8m was pulled this week, with Hirst saying it had little chance of success and it would not get in a bidding war.

With Feltex's debt forecast to rise to $143m by the end of this month as suppliers refuse credit because of the company's precarious position, shareholders would get nothing from Hirst ownership.

If the debt had remained at its June 30 level of $128m, there was a prospect they would have received 12 cents a share.


- NZPA