NZX halts Feltex shares pending announcement

The New Zealand sharemarket has placed a trading halt on the shares of troubled Feltex Carpets.

The halt, put in place today at the request of Feltex, would be lifted after the release of an announcement expected around noon, NZX said.

Feltex shares traded for a few minutes this morning before the halt, rising 1.2c, or 10.2 per cent, to 13c.

Sources close to the industry earlier said Australian company Godfrey Hirst was close to reaching a deal to rescue Feltex.

The move would create the largest carpet maker in Australasia with combined sales of $750 million.

Sources said that Feltex investors would receive a cash payment for their shares, and the company would be delisted from the NZ stock exchange.

Feltex is at the mercy of its bank, with debt of $129 million -- equivalent to almost 6.3 times this year's expected trading profits of about $20 million.

Godfrey Hirst and Feltex would not comment last night.

Feltex listed on the NZX in 2004 at $1.70 a share, valuing the firm at $240 million, but the share price has plunged amid a string of profit warnings.

Any deal with Godfrey Hirst will have to go over several hurdles, including Feltex opening its books to the Australian company and a shareholder vote at what is sure to be a heated special general meeting.

- NZPA