Turners condemn ANZ receivership of Feltex

UPDATE - At a press conference this morning, Craig and Graeme Turner, the Auckland businessmen behind the Sleepyhead rescue bid, were furious at the ANZ decision to place Feltec into receivership.

They said they had spent more than two months of their lives and offered more than $1.75 million as a rescue package only to have the bank call in the receivers.

"This is a disaster, it's a tragedy," said Craig Turner.

The brothers said they tried to contact the ANZ yesterday but had received no reply.

They had wanted the ANZ to fund working capital for Feltex for the next month until a shareholder vote at an extraordinary general meeting. They would then have paid back the money to the ANZ on the sale of Feltex.

"We assume the dispute was they were not prepared to fund this business through to the EGM to give the shareholders the right to vote on this," said Craig Turner.

They said the bank had taken the action despite the knowledge they were offering a fully funded rescue package to keep the company as a going concern.

In a further statement, they said: "This will be an extremely difficult day and time ahead for Feltex workers and their families, shareholders, creditors and the communities that rely on Feltex. Our thoughts are with them and we thank them for their support over the past two months."

The ANZ bank early today called in the receivers to wind up the struggling New Zealand company and its Australian subsidiaries.

It was announced to the New Zealand Stock Exchange (NZX) this morning that Colin Nicol, Peter Anderson and Kerryn Downey of McGrath Nicol and Partners have been appointed receivers for Feltex.

The receivers and their representatives arrived on site at Feltex's Lower Hutt plant at around 9.00am today.

They said they had applied for trading in its shares to be suspended.

In a statement, ANZ said: "The appointment of receivers and managers follows the deterioration in Feltex's financial performance which has led to unsustainable debt levels and a share price collapse."

The receivers said they were not yet ready to comment on the exact financial position of Feltex.

"Feltex is a New Zealand icon and we are moving quickly to ensure that it continues to operate as normal", said Mr Nicol.

Feltex said earlier today ANZ had served notice yesterday evening that it was withdrawing its "no action" letter and had issued a default notice demanding immediate repayment of all borrowings by the company.

The Feltex board had also appointed voluntary administrators in Australia.

As previously announced, Australian carpet maker Godfrey Hirst withdrew from negotiations with the company on September 5, Feltex said.

NZPA have since been advised that Godfrey Hirst made an offer directly to the ANZ Bank after that date.

A consortium led by the Turner brothers submitted an offer on September 8 which the company submitted to the ANZ Bank stating it was acceptable to the board and which it believed was capable of meeting the needs of all stakeholders including the ANZ Bank.

The Turners and the ANZ Bank had been in direct discussions up until Wednesday evening.

In its letter to the company, the ANZ Bank noted the discussions with both Godfrey Hirst and the Turners. But Feltex was told by the bank: "You have been unable to complete a transaction which will enable the ANZ to be repaid its debt in full. The progress of negotiations is no longer satisfactory to the ANZ."

The Feltex board was frustrated by the fact that the stakeholders of the company had been put in this position.

"An opportunity to recapitalise the company and provide a future for the company was, in the board's view, still viable under the Turner proposal," Feltex said.

"Further, the shareholders of Feltex Carpets will now be denied the opportunity of voting on the future ownership of the company."

The process of reducing debt by recapitalising the company's balance sheet had been clearly signalled to the market and to the ANZ Bank by the company. The bank had earlier accepted the process and the timetable and provided a conditional statement of "no action" until September 30, subsequently extended to October 20.

The directors have been working to protect the interests of the major stakeholders in the company -- creditors, employees, and shareholders, the majority of whom were New Zealanders -- as well as its customers and suppliers, Feltex said.

The board firmly believed that the debt to the ANZ Bank would have been repaid, or restructured, satisfactorily and that shareholders would have been given the opportunity to vote on their future engagement with the company.

The Engineering, Printing and Manufacturing Union (EPMU) said it had reports of some workers being turned away from plants.

It was advising members who worked at Feltex to go to their jobs and stay there.

They should also gather up their personal possessions and put them in their cars. Many of the workers were tradespeople with their own tools.

The receiver must as a priority tell the workers what the status of their jobs was, the EPMU said.

The first news of the receivership came in the early hours of today in an announcement from the Turner brothers, whose consortium had made a $51 million rescue bid.

"The bank has taken this extremely serious action in the full knowledge that there was a fully funded rescue package to keep the company as a going concern and protect the interests of Feltex Carpets' 1300 staff, shareholders and creditors," the Turners said.

In their statement the Turners said they had sought legal advice about an agreement they had reached with ANZ during the negotiation. The advice was that the agreements were enforceable "and we will be reserving our rights in this regard".

Later Graeme Turner told National Radio that their bid had been the only hope for shareholders and probably most of the staff in New Zealand and Australia.

Godfrey Hirst would keep parts of the Feltex operation going, but said the process would be "pretty ruthless", and as many as half the jobs could go, he said.

"Although they'll keep the brand going, it'll never be the same company again."

Under his consortium's bid all the plants would have been kept in operation but some rationalisation would have been needed, more in Australia than this country.

Feltex employs 1340 workers -- 820 in New Zealand and 520 in Australia.

Feltex has a scouring plant employing 45 at Kakariki near Marton, a yarn spinning plant in Lower Hutt employing 199, a yarn spinning plant in Feilding employing 85, a yarn spinning plant in Dannevirke employing 150, a plant manufacturing tufted carpet in Foxton employing 135 and a plant manufacturing woven carpet in Christchurch employing 170.

There are also 45 staff in sales and administration in New Zealand.

Feltex shares tumbled 83 percent in the first few minutes of trading after the New Zealand sharemarket opened today.

About 735,000 shares changed hands, with the price dropping 7.5c to 1.5c from last night's close of 9c.

At a press conference this morning, Craig and Graeme Turner, the Auckland businessmen behind the Sleepyhead rescue bid, were furious at the ANZ decision.

They said they had spent more than two months of their lives and offered more than $1.75 million as a rescue package only to have the bank call in the receivers.

"This is a disaster, it's a tragedy," said Craig Turner.

The brothers said they tried to contact the ANZ yesterday but had received no reply.

They had wanted the ANZ to fund working capital for Feltex for the next month until a shareholder vote at an extraordinary general meeting. They would then have paid back the money to the ANZ on the sale of Feltex.

"We assume the dispute was they were not prepared to fund this business through to the EGM to give the shareholders the right to vote on this," said Craig Turner.

They said the bank had taken the action despite the knowledge they were offering a fully funded rescue package to keep the company as a going concern.

In a further statement, they said: "This will be an extremely difficult day and time ahead for Feltex workers and their families, shareholders, creditors and the communities that rely on Feltex. Our thoughts are with them and we thank them for their support over the past two months."


- NZPA