Turner bid gives hope to Feltex

Feltex last night moved a step closer to a secure future after Graeme and Craig Turner - part of the family behind the Sleepyhead bedding business - submitted an unconditional bid to the troubled carpet-maker's bank, ANZ.

The Turners - with the backing of some of the most well-known names in New Zealand business and the Feltex board - have agreed to inject $51 million and replace ANZ's loans, which are now approaching $140 million, with those from another bank.

The support of the as yet unnamed bank removes the last hurdle to the deal. ANZ had demanded Feltex present it with an offer by 8am yesterday and said that it should be fully funded - a condition not met until late last night.

The fate of the company now squarely rests in the hands of the ANZ.

Other members in the consortium - revealed exclusively to the Herald - include Cliff Cook, founder of the retirement village operator Metlifecare; Andrew Bagnall, founder of travel company Gullivers Travel and Graeme Bowkett, founding director and shareholder of rubbish disposal group Waste Management. All three have seen big gains from recent takeovers of their companies.

This core group of investors, with the Turners, will subscribe to $40 million of convertible notes. They would also underwrite an $11 million renounceable rights issue to existing shareholders, with each security to be priced at 10c.

The Feltex share price closed up 1.6c to 10.4c yesterday.

The company confirmed it had received an offer from the Turner brothers to recapitalise and refinance the company.

Feltex said the board had submitted the offer to ANZ and would recommend it to shareholders in the absence of a superior offer.

A Feltex spokesman said last night: "The ANZ is considering the proposal. Feltex has had no formal response from them. But there are constructive discussions going on."

The Turners' offer would keep Feltex listed on the New Zealand Exchange. After the rights issue, Turners and the core investors would each hold 30.3 per cent of the company.

In addition to this, the Turners would be given 115 million warrants over unissued securities with a four-year exercise period and a price of 15c per warrant.

ANZ said this week that it reserved the right to call in its loans. On Wednesday, it was forced to extend its loan to Feltex from $128 million to more than $140 million, while sources said that Feltex's suppliers were demanding quicker payment.

The company floated in 2004 at $1.70 a share but got caught out by a trading downturn early last year.

Meanwhile, carpet company Godfrey Hirst, which last month had offered to buy Feltex's assets for $141.8 million, did not lodge a bid.

* Correction: The Turner brothers proposed a $51 million capital injection to rescue Feltex, not $55 million as reported in an earlier version of this story.