Feltex defends timing of manufacturer's bond issue

By PAUL PANCKHURST

Feltex Carpets chief executive Sam McGill yesterday defended the timing of the $50 million to $60 million bond issue that is a first step towards relisting the one-time manufacturing icon.

Forsyth Barr is organising and underwriting the issue of secured, second-ranking bonds for the New Zealand and Australian carpet manufacturing company.

Some rival brokers claim the issue is too soon for a company that reported losses in the 2001 and 2002 financial years and carries a heavy debt load.

McGill highlighted his long experience with restructurings in the carpet industry and also the company's rebound in the past two six-month periods in earnings before interest, tax, depreciation and amortisation.

The offer document said six-monthly ebitda "recovered strongly" to $13.8 million in the six months to June 30 last year, then hit $14.4 million, and is projected to next be $15.5 million to $16.6 million.

Feltex struck indigestion after buying the Australian carpet interests of Shaw Industries for $149 million in March 2000 and hitting problems including strikes, sales declines and a big write-off of goodwill.

The issue is for $50 million with oversubscriptions of up to $10 million. The proceeds will replace bank debt.

The minimum application is $5000.

The term of the bonds is just under five and a half years, with an interest rate of 10.25 per cent per year, which increases if the company does not float before September 30, 2005.

Bond-holders have a preferential right attaching to any future IPO.

The offer closes on May 30 and the bonds are expected to begin trading on the Stock Exchange on June 5.