Share buy-up points to Feltex raider

The buzzards are hovering over troubled carpet-maker Feltex.

Feltex shares gained 4c to 48c yesterday after two institutional investors picked up large stakes - possibly on behalf of a corporate customer.

"There is some suggestion that it's a corporate raider and GPG springs to mind as a possibility," said ABN Amro broker Matt Willis.

"Clearly, someone sees value there - the ability to get in, help rationalise and strip out costs and put the thing back on a firm footing."

Feltex has taken a battering this week after disclosing its net profit for the June year will likely be half of the $23.9 million predicted in its listing prospectus. The company also announced the premature departure of chief executive Sam Magill.

Feltex shares plunged to a low of 39c on the news against a listing price of $1.70 in June last year.

They had a brief reprieve yesterday when institutional brokers entered the fray. Goldman Sachs JB Were picked up 1.5 million shares at 46.5c a share after the market closed on Thursday and UBS yesterday bought 5 million shares at 44c and 715,000 at 47c.

"There is speculation around the market that someone might be accumulating a stake," said Hamilton Hindin Greene partner Grant Williamson. "It is not out of the question that someone might get interested at such levels.

"The Feltex name has been around for a long time and there is certainly value there, but they are struggling and a corporate raider or competitor - someone in the industry - could be interested."

GPG director Tony Gibbs declined to comment on whether the company has its eye on Feltex.

"I am aware of the rumours, but we never confirm or deny we are in any stock," he said.

Williamson said it was unlikely Feltex's New Zealand competitor, Cavalier, would be interested, but it could attract a buyer from further afield.

Some analysts are still wary of the stock, cautioning that it may not have bottomed out yet.

- NZPA