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

 


Feltex float ‘squeezed the juice from the lemon’ court hears

Feltex float ‘squeezed the juice from the lemon’, lawyer says, citing director email

March 18 (BusinessDesk) - Feltex Carpets’ former executive director Peter Thomas likened the company’s 2004 float to a lemon from which most of the juice had been squeezed out, according to an email cited at a court hearing into a shareholder lawsuit has been told.

The email was cited by Austin Forbes, lawyer for former shareholder Eric Houghton, who is suing the former Feltex directors, owners and sale managers for $185 million in a representative action on behalf of 3,639 former shareholders who say they were misled by the prospectus.

“It was a tough deal – every man and dog wanting a piece of the pie,” Thomas said in an email to a Credit Suisse executive after the IPO, according to Forbes. “There’s some goodness left in the lemon but we squeezed most of it out. Not bad for a company that was bankrupt 18 months ago.”

The email was one of a number cited by Forbes and is within the documents filed for the hearing. In an earlier email, from Thomas to other board members in February, months before the IPO, he gives advice to any “participants” disgruntled that Credit Suisse was taking its money out when other directors were required to retain some of the stock for 12 months.

“Obviously those participants think it’s a lousy investment and why should anyone buy them,” the email said, according to Forbes. “Hit your projections in the prospectus and it should not happen.”

But he also suggested they could buy a put option on the ASX, if not the NZX, which would have value if the market collapsed.

“It is evident there was concern about participants having to keep their shares described in the vernacular by Mr Thomas as lousy shares,” Forbes told the High Court in Wellington.

Forbes also went through a catalogue of documents showing Feltex’s monthly sales were below year earlier revenue in early 2004.

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, represented on the board by Peter Thomas, 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.

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

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 and is set down for nine weeks.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Interest Rates: NZ Dollar Jumps After RBNZ Trims OCR

The New Zealand dollar jumped more than half a US cent after Reserve Bank governor Graeme Wheeler cut the official cash rate by a quarter-point and said the currency needs to be lower, while dropping a reference to criteria that justified intervention. More>>

ALSO:

Drones: New 'World-Class' Framework For UAVs

The rules, which come into effect on 1 August, recognise the changing environment and create a world-class framework that accommodates ongoing development while still ensuring the safety of the public, property and other airspace users. More>>

ALSO:

Scoop Business: NZ Net Migration Reaches New Annual Record In June

New Zealand annual net migration rose to a new record in June as arrivals continued to be bolstered by Chinese and Indian students, while fewer locals departed for Australia. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news