Rejected offer now looks good compared with share price

Feltex last year rebuffed a merger proposal worth at least 60c a share for the carpet-maker's battered shareholders, according to a source familiar with the plan.

The offer by Australia's Godfrey Hirst lay on the table for the second half of last year and early this year, when Feltex's shares changed hands between 60c and 42c.

The deal represented a price well ahead of last night's close of 21c.

The disclosure is likely to increase the pressure on the Feltex board, which is now seeking as much as $60 million to relieve the company's $129 million debt burden.

Chairman Tim Saunders last night refused to discuss Godfrey Hirst's offer.

The deal, first mooted in June last year, was never disclosed. But the Herald understands the Melbourne-based firm, owned by the secretive McKendrick family, would have become Feltex's cornerstone shareholder holding a stake of more than 50 per cent, with the balance of shares remaining listed.

The deal may have boosted Feltex's financial resources and perhaps avoided the need for the capital injection the company is now seeking.

Feltex rejected the offer, after months of stop-start talks, and dismissed it as a backdoor takeover not in the interests of its shareholders.

The source said Godfrey Hirst, which at the start of this year held 8.72 per cent of Feltex, always believed its rival was in worse shape that the board thought it was.

Godfrey Hirst ended talks in February and argued its proposal was not given proper consideration. It sold its last shares in March.

The source added Godfrey Hirst would be interested in the business, should a suitable offer be presented to it.