Archive | Feltex

Published 8 March 2008

Investors in Feltex Carpets Ltd have filed a representative action in the Christchurch High Court against directors & advisors on the company’s 2004 prospectus.

The representative compensation claim has been filed by law firm Wakefield Associates on behalf of Eric Houghton & Darryl Jones against:

Tim Saunders, Waipara; John Feeney, chief executive Sam Magill & Peter Thomas, Melbourne; Craig Horrocks, Peter David Hunter & Joan Withers, Auckland; first defendantsCredit Suisse First Boston Private Equity Inc & Credit Suisse First Boston Asian Merchant Partners LP, second & third defendantsFirst NZ Capital, Auckland, fourth defendant, andForsyth Barr Ltd, Dunedin & Wellington, fifth defendant. 

The claim – led by Auckland investor Tony Gavigan – is made for investors in Feltex through its prospectus of 5 May 2004 or who bought on market before Feltex issued a profit downgrade announcement on 31 Mach 2005, and sold at a loss or continued to hold their shares through to the company’s liquidation in December 2006.

The representative plaintiffs allege the prospectus was misleading & deceptive, contained untrue & negligent statements, omitted to disclose material information, and breached the Fair Trading Act, the Securities Act & fiduciary duties to the plaintiffs.

Investors in Feltex shares at the time can opt out of the court action, but must do so by writing to the court by Friday 11 April, or by entering their names on an opt-out database on the plaintiffs’ website.

Website: Feltex Investors Trust

(This is not the website listed in the action group’s ads, which I coul.dn’t open)

Want to comment? Email [email protected].

Attribution: Company statement, story written by Bob Dey for The Bob Dey Property Report.

Published 12 October 2007The Securities Commission has found the Feltex Carpets Ltd IPO prospectus in 2004 wasn’t misleading, but the company failed in some elements of disclosure.

The commission inquired into the prospectus and the company’s compliance with financial reporting & continuous disclosure obligations.

It concluded that:

the IPO prospectus was not misleading in any material particularsFeltex failed to disclose certain material information to the market concerning changes to its banking facility agreement with ANZ in October 2005Feltex failed to disclose the breach of its banking covenants and did not properly classify its debt in its 31 December 2005 half-year financial statements, andthe work undertaken by Ernst & Young in its review of Feltex’s 31 December 2005 half-year financial statements failed to meet the required standards.

Commission chairman Jane Diplock said the commission had referred matters arising from the inquiry findings to the Registrar of Companies, the Accounting Standards Review Board & the Institute of Chartered Accountants.

Website: Securities Commission Feltex report

Want to comment? Click on The new BD Central Forum or email [email protected].

Attribution: Commission release, story written by Bob Dey for this website.

Published 1 August 2007

Accounting academic Alan Robb has described the Feltex Carpets Ltd 2004 IPO investment statement as misleading & deceptive, supporting a campaign to sue those involved in the float.

And Chris McVeigh QC has recommended to litigation manager Wakefield Associates, of Christchurch, that it proceed to issue joint proceedings to recover losses from the carpet company’s collapse.

Wakefield has 500 shareholder supporters and will now write to the remaining 8000 inviting them to join in a joint recovery action.

Feltex issued its investment statement on 5 May 2004, slashed its earnings projections in early 2005, reported a loss for the March 2005 quarter, went into receivership in September then into liquidation in December after the assets were sold. It also changed its name in December to Exftx Ltd.

Professor Robb, who was a senior lecturer in accountancy at Canterbury University, is now adjunct professor at St Mary’s University in Halifax, Canada. In his detailed report, he concluded: "Overall, I consider the Feltex investment statement to have been more misleading than that issued by Vertex."

Tony Gavigan, of the recovery campaign group FTXIt Ltd, said: "The average IPO investor loss of $10,000 is recoverable from the New York CSFB vendors & their agents."

Mr Gavigan has told investors: “40 million Feltex shares were bought on market at around the $1.70 issue price before they dropped below $1.60 on 8 October 2004. Another 24 million Feltex shares were bought on market above $1.50 before they plummeted below $1 after the forecast to the public was shattered on 1 April 2005. This loss of at least 50-70c/share may be recoverable.“Buyers in this period may have been reliant on the allegedly misleading IPO investment statement and so may have a cause of action.”

Wakefield Associates (Garry Wakefield & Matthew Shepherd, Christchurch) is a law firm specialising in accident compensation law & lump sum payments.

Websites:

FTX Investors Trust

Wakefield Associates

Earlier stories:

18 December 2006: U: The names behind the action, the week to 17 December 2006, part 2, Liquidators follow receivers into Feltex Carpets (now Exftx)

3 December 2006: Feltex sale completed

23 September 2006: U: The names behind the action, the week to 24 September 2006, part 2, ANZ calls receivers into Feltex Carpets

1 September 2006: Godfrey Hirst cleared to take over Feltex

2 August 2006: Feltex shareholders to get 12c/share from sale to Godfrey Hirst

11 June 2006: Feltex considers equity-raising as it anticipates $20 million ebitda

14 April 2005: Feltex makes Q3 loss

1 April 2005: Feltex slashes earnings projections

24 August 2004: Feltex earnings $1.1 million ahead of forecast

5 May 2004: Feltex float opens

Want to comment? Click on The new BD Central Forum or email [email protected].

Attribution: FTX Investors Trust release, story written by Bob Dey for this website.

Published 3 December 2006

Feltex Carpets Ltd’s receivers – Colin Nicol, Peter Anderson & Kerryn Downey (McGrath Nicol & Partners (NZ) Ltd) – have completed the sale of the company’s assets & operations to the Godfrey Hirst Group of Australia.

On completion of the sale on Friday, the company’s name was changed to Exftx Ltd.

Want to comment? Click on The new BD Central Forum or email [email protected].

Attribution: Company statement, story written by Bob Dey for this website.

Published 1 September 2006

The Commerce Commission has cleared Godfrey Hirst NZ Ltd to acquire some or all of the assets of Feltex Carpets Ltd.

Commission chairman Paula Rebstock said the commission was satisfied the proposed acquisition would not , or would not be likely to, substantially lessen competition in any of the relevant markets.

Godfrey Hirst is owned by the McKendrick family, of Melbourne. It primarily produces woollen tufted carpets for the residential & commercial sectors of the flooring market. Feltex manufactures tufted & woven wool carpets in New Zealand.

Want to comment? Click on The new BD Central Forum or email [email protected].

Attribution: Commission release, story written by Bob Dey for this website.

Published 2 August 2006

Feltex Carpets Ltd has entered into an agreement for the sale of its operations to the Godfrey Hirst Group of Australia.If Feltex shareholders approve the transaction and all other conditions are satisfied, Feltex shareholders should get back up to 12c/share. The price was 36c 6 weeks ago and got down to 8.9c today.Other key conditions of the agreement are execution of formal sale & purchase documentation, completion of due diligence by Godfrey Hirst, regulatory approvals by the Australian Competition & Consumer Commission and Foreign Investment Review Board, and the NZ Commerce Commission and Overseas Investment Office. Due diligence should be completed by 21 August and, subject to necessary consents & approvals being obtained, settlement should occur in early October.Key elements of the proposed transaction are:

Godfrey Hirst will acquire the shares of Feltex Australia Holdings Pty Ltd (through which Feltex Carpets Ltd operates its Australian business) and will acquire the assets and assume the non-interest-bearing liabilities of Feltex Carpets Ltd in New Zealand
The consideration payable by Godfrey Hirst for the Feltex operations will be $141.8 million, subject to movements in working capital until settlement date
Feltex’s bankers have agreed to facilitate this agreement by allowing a distribution to Feltex shareholders of up to 12c/share, provided various conditions are met
The final amount that will be available for return to Feltex shareholders will be a function of the working capital adjustments, Feltex’s trading cashflow until settlement, prevailing exchange rates and the interest-bearing debt level at settlement. The maximum amount able to be returned to Feltex shareholders is 12c/share
Of the $141.8 million to be paid by Godfrey Hirst, an amount will be held in escrow as security for the warranties to be provided by Feltex to Godfrey Hirst. The escrow arrangement is capped at $4.5 million, which equals about 3c/Feltex share. The period for escrow claims ends on 31 May 2007
It’s expected that an initial return of capital to shareholders will be made as soon as possible after settlement, with a second final return of capital to be made following release of any remaining escrow.

An independent expert will review the proposal and a special meeting will be called in September for Feltex shareholders to vote on it. The proposal will require approval by 75% vote of Feltex shareholders.Feltex chairman Tim Saunders said the Feltex board had agreed to support the proposal in the absence of any alternative being presented that was more favourable to Feltex shareholders & the company’s stakeholders. Fektex’s bank fully supported the agreement.”We understand Feltex shareholders will be extremely disappointed with the position that the company is now in. However, the board believes Feltex’s debt levels are too high and, in the absence of alternatives, it should put the Godfrey Hirst proposal to shareholders.”At an operating level the business has been generating positive cashflow. However, the market & profitability downturn of last year, and the subsequent restructuring costs, meant that a balance sheet restructuring had to occur in the near future.”While the board has worked hard on introducing new equity to the business, we have not been able to attract proposals that we believe would have resolved the concerns of the bank.”Godfrey Hirst will be entitled to a $1 million break fee if the transaction doesn’t close because Feltex accepts an alternative proposal, or a $750,000 fee if Feltex shareholders don’t vote to accept the proposal and Godfrey Hirst is willing to complete. No break fee is payable if the transaction doesn’t proceed due to a failure to receive regulatory approvals or if Godfrey Hirst elects not to complete.

Want to comment? Click on The new BD Central Forum or email [email protected].

Attribution: Feltex statement, story written by Bob Dey for this website.

Published 11 June 2006

Feltex Carpets Ltd said on Wednesday it expected to report ebitda of $20-21 million for the June year, after normalising the result by eliminating actual costs incurred due to restructuring & one-off corporate costs.

The company said if the exchange rate had been at present levels for the whole year ebitda would have reached $25-26 million.

Ebitda fell from $42.2 million in 2004 to $31.3 million in 2005, and in the December 2005 half-year got down to $7 million.

Feltex said market conditions were still very competitive and profitability, while improving, hadn’t yet reached the levels it was seeking.”Improved retailer confidence is now starting to show through in a stronger trend in the company’s forward sales order book. However, it has taken longer than anticipated to regain this confidence following the disruptive corporate activity surrounding the company from June 2005-February 2006.

“While, as expected, the third quarter’s sales & margins proved difficult, our sales & margins for April & May were encouraging and in line with our expectations in the current market conditions.”

Directors said Feltex was evaluating & implementing several initiatives to reduce debt, continued to improve plant & asset utilisation within its manufacturing operations, was working closely with its bank to restore debt to historical debt-servicing levels and was evaluating initiatives to raise new equity.

The company has identified $25 million of assets to sell and has realised $6 million so far.

Website: Feltex

Want to comment? Click on The new BD Central Forum or email [email protected].

Attribution: Company statements, accounts, story written by Bob Dey for this website.

Published 28 November 2005

Feltex Carpets Ltd has confirmed Peter Thomas as its chief executive, after he became an executive director in August, when Sam Magill stepped down as chief executive (his departure from the board is taking longer). Mr Thomas has been a director since 1997.

Feltex went on an international search before coming back to Mr Thomas. He said of his appointment: “There are some important reasons why I decided to discuss my potential candidacy with the board. My long association with Feltex has left me in no doubt that it is a fundamentally sound company. Sitting behind the current challenges is a great company which manufactures world-class products. Feltex has a good team of people who need new leadership to reach their potential, and to realise the company’s potential.” Mr Thomas is a New Zealander who lives in Melbourne and has extensive business experience on both sides of the Tasman. He gained a BCom at Auckland University and worked with international banks from 1973-80, primarily in the New York & London markets. He was a CS First Boston executive from 1981-2000, including spells as managing director of its Australian operations, chairman of its New Zealand operations and chairman of its Asia Pacific operations.

His association with CSFB took him to the Feltex board when CSFB Private Equity Group bought Feltex from BTR Nylex through a management buyout in 1996.

If you want to comment on this story, write to the BD Central Discussion forum or send an email to [email protected].

Published: 28 June 2005

Godfrey Hirst Australia Pty Ltd has picked up 5.78% of Feltex Carpets Ltd onmarket in the past week at an average price of 45.8c/share. The price closed today at 61c.

The Melbourne-based carpetmaker stood in the market for 5% this morning, but later took off the lid.

Godfrey Hirst finance director Jim Walsh said the company would now look at entering into discussions with the Feltex board about a possible merger of the 2 companies.

Feltex chairman Tim Saunders responded by agreeing to meet Godfrey Hirst chairman Kim McKendrick next week. “If Godfrey Hirst has a merger proposal to present to Feltex, we will approach such a proposal with an open mind and with a commitment to consider whether such an outcome will create shareholder value for Feltex shareholders when compared against alternatives.”Mr Walsh said a merger could benefit both sides, but added the proposal was the first step in a long, considered process. “Given the current serious difficulties Feltex is facing, any merger would be subject to the receipt of further information on the current financial & operating status of Feltex and also subject to any regulatory consents that may be required.” Mr Walsh said Godfrey Hirst didn’t intend, at this time, to make an offer for the rest of Feltex.Godfrey Hirst is a privately owned, fully integrated carpet manufacturer in Australia. Together with its sister company, Godfrey Hirst NZ Ltd, it said it was the 2 countries’ leading manufacturer of high-quality carpet in both the residential & commercial carpet sectors.The McKendrick family, originally from New Zealand, bought Godfrey Hirst in 1966 and still owns the company. The group exports throughout Asia, Europe & America.

Hunter Hall Investment Management sold 4.61% of its 5.28% of Feltex last Thursday. It had sold down from 9.04% last October (seemingly without giving notice of 1% shifts, a subject Securities Commission chairman Jane Diplock spoke about yesterday).

Feltex started warning it was in dire straits only on 1 April, when it warned its profit would fall from a previously forecast range of $23-25 million to $15-16 million for the June 2005 year.

20 June revision

On 20 June, it revised that figure down to $11.5-12 million, excluding restructuring costs, and sacked the chief executive, Sam Magill, effective after the annual meeting in December. Feltex made $12.2 million in the first half, followed by an $880,000 loss for the March quarter and 4th-quarter earnings now projected at $2-700,000 before restructuring costs.

“Since March, we have experienced a further tightening of market conditions in Australia. Average selling prices & margins in Australia for the 4th quarter are likely to be lower than anticipated in the April earnings guidance. In addition, the New Zealand residential market has also started to soften. The commercial market is tight, but steady in both countries,” Mr Saunders said.

“The board remains committed to its marketing strategy of increasing sales in the premium & mid-value segments of the market. The proportion of the company’s sales in the premium & mid-value residential segments has increased this year, assisted by new product lines.”However, there are external factors that are putting pressure on the company’s ability to maintain & improve average selling prices & margins. Competitive conditions in Australia, which represents 75% of the company’s sales, have continued to intensify. At the same time, market conditions in New Zealand have started to soften.”The continuing strong NZ & Australian currencies against the US currency have resulted in imported carpet becoming more competitive against locally manufactured carpet. The market share of imports in Australasia has risen from 14.5% to 17% for the 12 months to 31 March 2005.”Because of the current competitive conditions in Australia, the increasing volume of imports, the softening of demand in New Zealand and the uncertainty around the timing of the market recovery, a comprehensive review of the company’s operations is required now,” Mr Saunders said.

Websites: Godfrey Hirst Group

Godfrey Hirst NZ

Feltex

Earlier stories:

14 April 2005: Feltex makes Q3 loss

1 April 2005: Feltex slashes earnings projections

24 August 2004: Feltex earnings $1.1 million ahead of forecast

5 May 2004: Feltex float opens

If you want to comment on this story, write to the BD Central Discussion forum or send an email to [email protected].

Published: 14 April 2005

Feltex Carpets Ltd confirmed its dire 1 April profit warning yesterday by declaring an $880,000 loss for the 3rd quarter, down from $2.4 million last year.

Ebitda fell 60.5% to $3.4 million. Feltex said rebates offered to retailers for meeting sales targets meant end-of-month sales could be high after a poor start, but that didn’t happen this time.

Still, it retains a somewhat positive outlook: “Production of the new residential ranges has brought the company into a fully stocked position to enable roll-out of these new products. Distribution of sampling for the new ranges has been substantially completed. “However, a strong $NZ, delays to commercial contracts, increased imports, aggressive competition & lower residential carpet demand will continue to present significant challenges to the company.”

Synthetic raw material costs rose significantly during the year, with another increase announced on 31 March.The company is sticking with its 1 April projection for the full year, of $295-305 million in sales, $15-16 million in net profit after tax, and hasn’t changed its dividend position.

Earlier story:

1 April 2005: Feltex slashes earnings projections

If you want to comment on this story, write to the BD Central Discussion forum or send an email to [email protected].