Feltex reassures rival merger still alive

Carpet-maker Feltex went on to the front foot yesterday to assure rival Godfrey Hirst it was still interested in their proposed merger.

Godfrey Hirst had earlier indicated it would walk away from the merger after news Feltex would make restructuring its main priority.

The Australian-based company said it was disappointed after reading comments made by a Feltex spokesman to the NZ Press Association to that effect and was not prepared to "hover forever".

Godfrey Hirst finance director Jim Walsh said: "We had been hoping they would see the benefits of the merger proposal that we put to them, which clearly has significant benefits for Feltex shareholders, but it seems they are not interested in pursuing that at this point in time.

"Clearly, we can't hover here forever. These processes are expensive and if they are intent on not proceeding at this point it may be best for us to withdraw."

However, Feltex then contacted Walsh in Australia to confirm it did want to continue merger discussions.

Feltex chairman Tim Saunders said the exchange of information on each other's operations was still proceeding.

Walsh said although this was inconsistent with the comments made to NZPA, he looked forward to discussions.

Godfrey Hirst, privately owned by New Zealander Kim McKendrick, has been seeking merger talks with Feltex since it became its biggest shareholder in June - paying almost $5 million, or 58c a share, for a stake of close to 6 per cent.

This came at a vulnerable time for Feltex, which has this year suffered two profit downgrades, removed chief executive Sam Magill and embarked on an a full review of its operations, put down to a slump in the Australian housing market. Final announcements resulting from the review, including more potential job losses and plant closures, are expected before its December 1 annual meeting.

Walsh said there was no reason to believe Feltex had any other agenda or was stalling on the proposal.

"But we're not going to wait until the timing's right for them necessarily."

The proposal put to Feltex was fair and generous, low risk and would be appealing to the board and shareholders.

Walsh said he would be disappointed if Feltex deferred considering the proposal, and proceeding with a restructure could compromise the possibility of a merger and its benefits.

Merging the two would create Australasia's largest carpet manufacturer.