Further Expansion Oflower Hutt Spinning Capacity

FURTHER EXPANSION OF
LOWER HUTT CARPET YARN SPINNING CAPACITY

Media Release: 12/11/2003

Feltex Carpets Limited has almost doubled production capacity at its Lower Hutt yarn spinning plant, in a $4 million expansion programme. The new production facility was opened today by the New Zealand Minister for Industry and Regional Development, the Hon Jim Anderton.

The Lower Hutt expansion continues Feltex’s market growth in New Zealand and Australia. It follows an earlier expansion – in 2002 – based on the relocation of spinning equipment from Australia due to the current labour cost advantages and the lower Government taxes on labour in New Zealand compared to Australia. Feltex believes that it is in the interest of continuing employment opportunities for the Government to maintain these current advantages.

The 2002 expansion increased employment opportunities at Lower Hutt, with staff numbers rising by 80 to 220. A further 25 job opportunities will be created with the commissioning of the final production line that is part of the overall expansion.

The Chief Operating Officer of Feltex, Mr John Kokic, said the increased production capacity installed at Lower Hutt was needed to support Feltex’s increasing market share, primarily to the New Zealand and Australian residential and commercial markets, as well as global markets.

Feltex is one of the two largest carpet manufacturers in Australasia. It is the only carpet company in Australasia producing both woven and tufted carpets.

Feltex New Zealand has seven manufacturing sites, the expanded Bell Road (Lower Hutt) site and Dannevirke, Feilding, Kakariki, Foxton, Petone, and Christchurch. The plants operate 24 hours per day, seven days per week. There are approximately 1900 staff employed at the Feltex plants.

Feltex completed a very successful $60 million Bond Issue in 2003, overscribed in 4 days.

There are 2,653 New Zealand bond holders, who subscribed to its public issue of secured bonds . The company has signalled that it will consider issuing equity and seeking listing on the New Zealand Exchange (NZX).

For the year ended 30 June 2003 the company announced a strong recovery in earnings, with a net surplus after income tax of $5.7 million.

ENDS

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