Richard Inder: Guilt for failure must lie on both sides

Feltex's collapse into receivership will worry the customers of ANZ, the carpet maker's lender and the party that pulled the pin. They are now obliged to ask: How will the bank treat me when the going gets rough?

This is not because I have a fixed view on the viability of the rescue package put together by the wealthy Auckland businessmen Graeme and Craig Turner.

Those with much more information than I have could not even agree on this point. Feltex's receivership is proof of that.

However, Graeme and Craig Turner fronted a very credible bid.

Their deal was good for New Zealand. It would have also helped to maintain the depth and the liquidity of a sharemarket already suffering from a raft of departures and now set to lose The Warehouse.

The Turners have proven their mettle in business. Of all the products a New Zealand company should take to the world, bets 50 years ago that we could compete in bedware would have been given long odds. But the Turners' Sleepyhead group is a leader in the Australasian market.

They are backed by some of New Zealand's best-known and successful businessmen: Graeme Bowkett, a founding director and shareholder of rubbish disposal group Waste Management; Cliff Cook, founder of retirement home operator Metlifecare and Andrew Bagnall, founder of travel group Gullivers.

All three have led successful publicly listed companies, which have been sold at a big profit to shareholders (albeit sadly) offshore.

They had lined up Kim Ellis - the respected former head of Waste Management - to be the chief executive of the reconstructed business. And they were promising a deal that held out the prospect of some return to shareholders, who now have nothing but a claim on a burned-out listed shell.

They say all that was required of the bank was that it take a debt haircut, said by sources to be not materially different to the cut agreed with rival bidder Godfrey Hirst, and to guarantee funding until shareholders voted on the rescue package.

They claim ANZ - to the highest echelons - had agreed to a deal and then reneged and they tell of late night vigils with bankers and lawyers as they faced the next hurdle.

Their version of events is backed by Feltex, which said: "The board firmly believes that the debt to the ANZ bank would have been repaid, or restructured satisfactorily."

Feltex chairman Tim Saunders also laid out the claim many have long thought, but rarely voiced publicly - that ANZ has greater loyalty to an Australian business, such as rival Feltex bidder Godfrey Hirst, than it does to a New Zealand one. This talk has been given credence by news yesterday that Hirst approached the ANZ over another deal on the same day as it pulled its $141.8 million rescue package.

The Turners present a convincing picture of a team of enthusiastic, committed entrepreneurs who have been frustrated by the bureaucracy that is - in my experience - typical of large and long-established corporates.

This image could be a carefully constructed PR campaign.

The Turners have shown their skill in marketing, of which the dark arts of public relations are a specialisation. ANZ maintains it never agreed to a deal and that the Turners tried to impose unreasonable conditions, or kept changing their offer.

The brothers potentially need to deflect criticism that their entry into the fray dislodged an approved bid for Australia's Godfrey Hirst.

Is it credible that the bank would allow transtasman sensibilities to become a factor in a decision where the lives of more than a thousand workers and more than $100 million is at risk, especially when the business has its headquarters in Melbourne?

Would it agree to receivership simply because it was not prepared to carry the firm through to the shareholder vote?

It is hard to answer yes to these questions, especially when they are set alongside undeniable fact that ANZ had nurtured a long and apparently cordial relationship with the Turners' Sleepyhead bedware company.

A bank does not call in its loans lightly.

Although the receiver McGrath Nicol owes primary responsibility to ANZ, receivership still dilutes the bank's ability to negotiate a deal that satisfies its interests.

The risk that shareholders would have rejected the Turners' offer, leaving the ANZ in perhaps a worse position than it is now, also cannot be discounted. Pulling the plug now may well have been the best outcome for ANZ's shareholders.

There are no black and white answers to any of these questions, which must also be tempered with another; would such a failure managed by any other bank have produced a substantially different result?

In the wash up, guilt for the failure must inevitably lie on both sides.

My sympathy however is with the Turners.