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

 


Feltex ‘woefully failed’ to disclose risks, lawyer says

Feltex prospectus ‘woefully failed’ to disclose risks, shareholders’ lawyer says

March 17 (BusinessDesk) – Feltex Carpets was touted as having excellent investment features when the carpet-maker was taken public in 2004 but its prospectus failed to disclose risks that contributed to its collapse just two years later, a shareholder suit alleges.

Eric Houghton is suing the former Feltex directors, owners and sale managers in a representative action on behalf of 3,639 former shareholders who say they were misled by the prospectus. The action began in the Wellington High Court today. The suit seeks $185 million including interest, Houghton’s lawyer Austin Forbes told the court.

Houghton bought 11,755 Feltex shares at $1.70 apiece, or $20,000, in the initial public offering in May 2004, drawn to an investment that offered a gross dividend yield of 9.6 percent. All up, vendor Credit Suisse First Boston Asian Merchant Partners raised $193 million, selling 113.5 million shares, and Feltex raised a further $50 million to repay bondholders.

Within a year the stock was virtually worthless, thanks to a series of warnings that the company would miss its prospectus forecasts, and receivers were appointed in September 2006. Australian carpet maker Godfrey Hirst ended up buying the assets.

Forbes told the court the short gap between profit downgrades and collapse was “striking” after a prospectus that had painted “a very rosy picture of Feltex.” His client would not have invested had the true position of the company been known and in any case, given the state of Feltex the offer “should never have been made,” he said.

Houghton’s suit has four main causes of action involving breaches of the Fair Trading Act and negligence by all the defendants, and breaches of the Securities Act.

To support the claim that the prospectus didn’t adequately disclose the risks of the investment, Forbes cited submissions made by Feltex Australia to the Australian Productivity Commission in which it warned that it faced significant risks from imported carpets as a result of a drop in tariffs.

Of the directors, Tim Saunders, Sam Magill, John Feeney, Craig Horrocks, Peter Hunter and Peter Thomas all had a financial interest in Feltex, he said. Joan Withers, the other first defendant, was the exception.

Forbes is continuing with his opening submission in a case that has drawn at least three other QCs among the defence lawyers. Credit Suisse private Equity, the promoter of the sale, is second defendant, while owner Credit Suisse First Boston Asian Merchant Partners is third. First NZ Capital and Forsyth Barr, which managed the IPO, are fourth and fifth defendant.

The case is continuing.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:


NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • NIWA: The Year's Top Science Findings

    Since 1972 NIWA has operated a Clean Air Monitoring Station at Baring Head, near Wellington... In June, Baring Head’s carbon dioxide readings officially passed 400 parts per million (ppm), a level last reached more than three million years ago. More>>

    ALSO:

    Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news