Key Points:

One of the businesses thought to be a possible contender to buy a stake in Fisher & Paykel Appliances has ruled itself out of the running, adding to doubts whether a cornerstone investor will be found.

United States appliance firm Whirlpool said yesterday that it was not interested in Fisher & Paykel Appliances.

The New Zealand whiteware maker told investors on Monday that it was in talks with a number of parties in a bid to raise capital to help with its burgeoning debt levels.

The company's debt is expected to hit $570 million by the end of March - a debt to debt-plus-equity ratio of 43 per cent - as a result of a fall in the New Zealand dollar and a drop in sales.

The company's share price plummeted 35 per cent to 65c on the news but yesterday bounced back 7c to close at 72c after the Government said it would not rule out a bailout of the business.

Fisher & Paykel has not asked the Government for help and is pushing on with plans to find a major investor and raise capital from existing shareholders.

But David Graham, Whirlpool general manager of marketing for Australia and New Zealand, said his company would not be the white knight.

"At this juncture we are not seeking to acquire Fisher & Paykel New Zealand," he said through a representative who confirmed the company was also not seeking to become a cornerstone investor.

One market commentator who did not wish to be named said he believed there was a low probability of Fisher & Paykel finding a cornerstone investor.

"There is nothing special about Fisher & Paykel - there are so many companies out there struggling to get finance and so few coming in to invest."

He said that while other appliance companies like Haier, Arcelik and LG were the obvious choice for investment, they had their own problems with falling consumer demand in the wake of the economic crisis.

He questioned whether any buyer would want to take on half a billion dollars in debt.

Tyndall Investment Management's Ricky Ward said it was difficult to see what would attract an investor to the company.

"At the end of the day they just make fridges and washing machines Where is their competitive advantage?"

He thought a bailout by the Government was also unlikely.

"I know there are an awful lot of New Zealand workers that are employed by Fisher & Paykel.

"But the previous Government worked to increase competition in this market.

"I don't see why they would invest in a $180 million company that has been incentivised to move its operations overseas."

Ward said the Government's plans were all about boosting the economy through infrastructure and supporting the finance sector.

Commentators believe a capital raising from shareholders is the only real option for the company.

Ward said the take-up of the capital raising would depend on the price it was set at.

"If people can form a view that it has a viable function, then it just comes down to price."

Brook Asset Management's Chris Gaskin said it would support the company in its capital-raising efforts.

But it was in discussions with management to add another member to the board of Fisher & Paykel.

"We will be seeking an additional director on the board with financial expertise," said Gaskin.

While many are reluctant to openly criticise the board and management of one of New Zealand's most iconic companies, there is talk that the firm has made poor decisions in the past year on its debt position.

"No one wants to bag these guys, but they have known for a long time that they needed to raise capital," said one commentator.

He said the board and management needed to change.

WHAT NEXT
Options for Fisher & Paykel:
* Cornerstone investor.
* Equity capital raising from existing shareholders.
* Government bailout.