Talley's reportedly doing due diligence on Feltex

A report today identifies South Island fishing company Talley's Fisheries as the mystery third party said to be carrying out due diligence on troubled carpet maker Feltex.

Trading in Feltex shares was suspended for the day last Friday after a newspaper report that it needed new capital and was in breach of its banking covenants.

A company spokesman said that while Feltex would continue to face difficult times, it was meeting its financial obligations to banks and creditors.

The company said an unnamed investor wanted to take a cornerstone stake in the company -- subject to due diligence -- and a successful capital raising was fundamental to the future of the business.

During the past week analysts estimated Feltex needed between $20 million and $60 million to stave off its bank.

Today The National Business Review reported three sources had told it that Talley's had made a proposal to Feltex and was working with the company and its bankers.

Talley's directors were not available for comment yesterday, NBR said.

The sources had said Talley's was looking at underwriting a possible rights issue of new shares, resulting in the fishing company becoming a cornerstone shareholder in Feltex.

ASB Securities managing director Tim Preston today criticised Feltex for leaving the market in limbo by not identifying the party doing due diligence.

Shareholders had no way of judging the potential investor's credibility, he told the Dominion Post.

When shares in Feltex recommenced trading on Monday they fell as much as 17c from the Thursday close of 36c. Yesterday they closed at 24c.

- NZPA