Lost Feltex investors signed up to litigation

Photo / Hawkes Bay Today
Photo / Hawkes Bay Today

Some out-of-pocket investors are being automatically joined into the Feltex class-action by their nominee company, said a lawyer associated with the case

Around 3000 investors have joined representative action against former Feltex directors and sellers of its shares, alleging the company's prospectus in 2004 - the year it floated - contained information that was misleading or wrong, or omitted to make information available that would have affected investment decisions.

Feltex collapsed in 2006, causing 8000 investors to lose millions of dollars. Investors, represented in court by Feltex shareholder Eric Houghton, are seeking a refund of the purchase price of their shares, plus associated interest and costs.

The first part of the case is due to begin in the High Court at Wellington next March and investors have until this Thursday to opt-in to the case.

Houghton's lawyer, Austin Forbes QC, said yesterday the opt-in closing has "brought a rush of last minute claimants" and that another 100 or so investors had asked Houghton to represent them in the litigation.

See his statement here.

But Forbes said Houghton has not been able to contact numerous investors who were Forsyth Barr clients because their investments in the Feltex float were first registered in the name of their nominee company, Forbar Custodians Limited.

As a result Houghton has not been able to offer these claimants representation.

However, Forbes said Houghton's solicitors have been advised by lawyers for Forsyth Barr that it is intending to opt in any Forbar Custodian managed clients who invested in the Feltex initial public offering in June 2004.

"Because Forsyth Barr's nominee company is the trustee and the shares were bought in its name, they're the party that has to opt them all in, with the option being given that if they didn't want to stay in they could opt-out," Forbes said.

Forsyth Barr is one of the defendants in the litigation.

The others, who have denied the claims against them, include former chairman Tim Saunders, former chief executive Sam Magill and former directors John Feeney, Craig Horrocks, Peter Hunter, Peter Thomas and Joan Withers. Former director John Hagen is not involved in these proceedings.

Also targeted in the proceedings is Credit Suisse First Boston Asian Merchant Partners (which offered Feltex for sale), Credit Suisse Private Equity and First New Zealand Capital.

While the cut-off date for opting-in is this Thursday, some investors may also be unable to take part in the litigation if an appeal to the Supreme Court succeeds.

Last month the Credit Suisse respondents were given leave to appeal to the Supreme Court on whether some or all of the shareholders represented by Houghton were time-barred from the proceedings.

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