Two rescuers vie to pull Feltex up off the carpet

Two bidders are vying to put carpet-maker Feltex back on a sound financial footing, industry sources say.

The names of the potential buyers are not known, although Australian carpet-maker Godfrey Hirst has been suggested as one.

Godfrey Hirst last year suggested a merger with Feltex but was rebuffed.

Feltex yesterday called a halt to trading in its shares because it was in negotiations "for a restructuring of the company".

It declined to comment further, saying only that the halt would continue for at least two days. The shares last traded at 21c, well below the 2004 float price of $1.70 a share.

No one from Godfrey Hirst was available for comment.

Whatever happens Feltex shareholders do not look to be in a strong position.

Last month, the company said it had breached its loan terms with ANZ and needed more money. It hopes to receive $19 million from asset sales next year.

But Feltex is now at the mercy of ANZ, which has given it until September to find a new backer.

Informed observers say it can be optimistically valued debt-free as a multiple of around six times this year's trading profits - earnings before interest, tax depreciation and amortisation.

Feltex has already promised that in the year to June, trading profits will be about $20 million, suggesting the company is conservatively worth $120 million - less than its $129 million borrowing.

It needs $60 million more to reduce its debt to put it on an even keel. Even if it gets that - and this is by no means certain - the ANZ looks likely to have to take a loss.