Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Feltex investigation unsatisfactory

30 August 2006

Feltex investigation unsatisfactory and inappropriate

Feltex workers and shareholders left devastated by the recent $200 million drop in the company's value deserve more than the unsatisfactory and inappropriate Securities Commission investigation that was recently completed, Green Party Economic Development Spokesperson Sue Bradford says.

The Securities Commission has conducted an investigation into Feltex Carpets Limited's 2004 Initial Public Offering (IPO) and concluded that the Prospectus was not misleading about the projected profits and risks facing the company, despite the fact that two years after the share float the company has collapsed in spectacular fashion.

"The Securities Commission decision to take no further action seems bizarre, particularly in light of the Commission's own vision statement, which purports to want to ensure that 'investors can have confidence in New Zealand's securities markets so that the markets increasingly attract investment'. Surely the wiping of $200 million off the value of one company in such a short time completely undermines this goal.

"Furthermore, it is concerning that the Securities Commission was the body to conduct this investigation, as it is by no means neutral in the whole sorry affair.

"In 1997, Credit Suisse First Boston Asian Merchant Partners purchased Feltex's shares for $19.5 million, split these into 120 million shares, and floated them in the IPO at between $1.70 and $1.95 a share in 2004, walking away with a cool $200 million profit. The Securities Commission gave Credit Suisse First Boston nine exemptions under the Securities Act for information not included in the flawed IPO Prospectus.

"Given this involvement, it seems highly inappropriate that the Securities Commission should have been the body to investigate the IPO, as its ability to fairly investigate its own actions must be in question.

"Sadly, it is Feltex workers, Feltex shareholders and the regions and communities where Feltex operates that are the biggest losers following this extraordinary expropriation of wealth.

"It is not the first time that Feltex has been pillaged. It was raided by Equiticorp in the 1980s and almost collapsed at the same time Equiticorp did. The head of Equiticorp, Allan Hawkins, was eventually convicted and jailed for fraud. It is a tribute to the workers and local management of Feltex that the company still remains a profitable carpet manufacturer.

"I hope that Feltex will be able to conclude an agreement with an investor that keeps the company in kiwi hands, employing kiwi workers," Ms Bradford says.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Media Mega Merger: StuffMe Hearing Argues Over Moveable Feast

New Zealand's two largest news publishers are appealing against the Commerce Commission's rejection of the proposal to merge their operations. More>>

Elsewhere:


Approval: Northern Corridor Decision Released

The approval gives the green light to construction of the last link of Auckland’s Western Ring Route, providing an alternative route from South Auckland to the North Shore. More>>

ALSO:


Crown Accounts: $4.1 Billion Surplus

The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says. More>>

ALSO:

Mycoplasma Bovis: One New Property Tests Positive

The newly identified property... was already under a Restricted Place notice under the Biosecurity Act. More>>

Accounting Scandal: Suspension Of Fuji Xerox From All-Of-Government Contract

General Manager of New Zealand Government Procurement John Ivil says, “FXNZ has been formally suspended from the Print Technology and Associated Services (PTAS) contract and terminated from the Office Supplies contract.” More>>