Turner plan unlikely to head off Hirst

Godfrey Hirst looks to still be the frontrunner to buy struggling carpet-maker Feltex despite the possibility of an alternative rescue plan from Graeme and Craig Turner.

Macquarie Equities investment director Arthur Lim said yesterday the Turner proposal lacked credibility and, in the end, the shareholders' "yes or no" vote on the Godfrey Hirst proposal would probably win out.

He said substantial shareholders in Feltex had already been unsuccessfully canvassed about increasing their investment, another potential investor had walked away and the Turner deal would require ANZ bank to stay involved.

"From the bank's perspective, the Godfrey Hirst deal allows it to essentially walk away from what has been a difficult position for it."

The Turner brothers - of the Sleepyhead bedding group - are trying to interest other investors to join them in putting cash into Feltex, in a proposal that would see the company remain listed on the NZX.

Feltex shares rose 1.5c to 10.4c after the news of the Turners' interest in the company yesterday.

One analyst, who did not want to be named, said the proposed deal by the Turner brothers would make shareholders think twice about Godfrey Hirst but it was just talk at this stage.

"At the moment, it's very pie in the sky but it all depends on whether investors actually want to get on board this thing," he said.

The fact a deal had been provisionally agreed with Godfrey Hirst probably meant ANZ was "quite willing to get out in a hurry".

The Godfrey Hirst proposal would see the Australian carpet company paying $141.8 million for Feltex, subject to working capital movements.

If all $128 million owed to ANZ were repaid then $13.8 million would be left over that, in theory, when divided among the more than 149 million shares equated to 9.24c a share.

The maximum payout to shareholders would be 12c a share, although the final amount was dependent on working capital, cashflow, exchange rates and the interest bearing debt level at settlement.

"The directors of Feltex unanimously support the proposal and intend to recommend it to shareholders in the absence of a superior offer," a Feltex spokesman said.

The Godfrey Hirst deal was seen by Feltex as relieving some of the uncertainty for its 820 workers employed around the country, although existing contracts would be reviewed.