Feltex to allow Turner brothers to check books

Troubled carpet maker Feltex Carpets said today it would allow Sleepyhead principals, the brothers Graeme and Craig Turner, to check its books with a view to buying into the company.

Feltex added however that despite the agreement with the Turners, it was continuing to advance its agreement with rival Godfrey Hirst.

On August 1, the Australian company agreed to buy Feltex for $141.8 million, which would give Feltex shareholders a maximum of 12c a share.

"Feltex expects Godfrey Hirst to complete due diligence during August 2006 and understands that applications for all regulatory approvals have been, or are in the process of being, made by Godfrey Hirst," the company said.

It reiterated statements made on August 1 that, "in the absence of any alternative transaction being presented that is more favourable to Feltex shareholders and the company's stakeholders, the board of Feltex will recommend the Godfrey Hirst transaction to shareholders".

The two wealthy Auckland brothers are trying to put together an alternative rescue plan.

They have suggested a 33 per cent underwriting of a rights issue, provided other well-heeled investors are prepared to put up money on similar terms.

They estimate Feltex needs between $35m and $40m to put it back on an even keel.

That would allow Feltex to remain listed and shareholders would participate in any recovery, should it occur. Under the Hirst plan, shareholders would be forced to sell. A shareholder meeting is scheduled next month to vote on the Hirst plan.

Craig Turner told the Herald last week he hated to see a famous New Zealand brand go overseas.

Feltex is reported to be trading profitably, has a strong order book and is servicing its $128m of debt.

Last week, Feltex chairman Tim Saunders said shareholders had little choice but to accept the Hirst offer because there was no alternative bid.

Under the Hirst rescue plan, shareholders would get between 9c and 12c a share in two instalments -- the first, of up to 9c, after settlement in October, and up to another 3c next year when certain warranties expired.

Feltex shares were floated at $1.70 in 2004, so the deal would give shareholders a loss of up to $240m.

Feltex shares firmed 0.1 of a cent to 12.1c today.

The Turner brothers, who share a $70m family fortune, according to the NBR Rich List, want Feltex to issue preference shares that would have priority if the company was wound up.

Feltex said it was free to look at alternative proposals until a September shareholder meeting to consider the Hirst offer. Hirst would get a $1m break-fee if its scheme was not accepted.

Hirst is expected to get considerable benefits from knitting the two companies together with some rationalisation of plants on both sides of the Tasman expected.

- NZPA