Feltex (FTX) - All over for shareholders

[Ed]

Your wofe tort you two yse the spillchocker BROCKS?

[BRICKS]

quote:Originally posted by Ed

Your wofe tort you two yse the spillchocker BROCKS?


Bugger me Mr Ed the talking Horse.. [8D]

[Toddy]

For Barr has been doing the rounds according to this article. What's amazing is that it sounds like everyone knew about the cash crises except for the NZX and FTX shareholders. And For Barr had FTX as a 'hold'. Jeeze, I wonder what a 'sell' coy looks like.


From the Dominion

Feltex's share register shows Mr Hubbard, owner of South Canterbury Finance and worth an estimated $400 million, with 2.6 per cent. Mr Hubbard said he was approached by Forsyth Barr managing director Neil Paviour Smith about a potential Feltex rights issue. He told him he could not say yes immediately.

"I suppose you'd have to make an assessment of whether the company was going to make it and what the prospects were of a dividend and all those sorts of things," Mr Hubbard said.

He did not know who Feltex's potential investor was and the stake in his name was not all his, he said. If asked to invest in Feltex directly he would consider it.

[D_Pick]

See below for today's first negative article

Troubled carpetmaker Feltex's shares lost one-third of their value and unions rate staff job security at only 50-50.

http://www.stuff.co.nz/stuff/0,2106,3713148a13,00.html

following extract taken from above article

Meanwhile, one analyst suggested Feltex needed to raise up to $60 million, or 37.5c for each existing share, to stave off the ANZ. This analyst said any rights issue would leave minority shareholders "diluted to buggery". However, another suggested Feltex needed a figure nearer $20 million.

..........................................

How much does FTX need to raise to survive that is the question?

[winner69]

So 'analysts' say Feltex need somewhere between $20 - $60M to get it out of its current embarassing distressed situation

Problem with $20M is that it is only a short term solution and heaps of good things still need to go right for Feltex to get of the proverbial. It doesn't matter whether Feltex debt is $110M as Feltex say or $129M the NBR think it is because Feltex have not been entirely upfront .... $20M is only a lifeline

Something close to $50M to $60M puts some respectability around the Feltex balance sheet ... the interest charge goes away and they can settle down and implement some decent long term plans (if that is capable .... new management i think is needed)

How much goes in affects my approach ... short term punt on the new wave of ortimism or becoming a longer term holder because something solid and tangible is in place.

Even with Ebitda of $20M in times of despair would warrant an enterprise value of $150M (about what it is today by the way ... so it is fundamentally fairly valued on latest guidance) ... it all depends who owns the company ... bankers or shareholders.

Belg asked what is Feltex worth .... at least $150M as above or in good times in excess of $300M. Eliminate most of that debt and that is $1-$2 a share on 150m shares ... the problem being is how many shares will there be in future ... probably heaps

So belg .... work it out if recap is at 15 cents what the potential is at the top of the cycle for Feltex ... if things go right

[winner69]

“Telling an institution but not telling shareholders has got to be clear evidence that they have messed up big time I would have thought,” Mr Sheppard said.

“The statements they [Feltex] have made would appear to arguably be deceptive, if not, at least misleading.”


http://nbr.co.nz/home/column_article.asp?id=15531&cid=4&cname=Business+Today

[D_Pick]

This NBR artcile puts additional pressure on Feltex board and management's reputation. Maybe another trading halt and explaination is in order ... to be fair to NBR journalist's

What's the probability now of NZX regulation imposing a second larger fine on FTX (if article is correct and a leaky institution was in possession of this information two weeks ago).

Given FTX's current financial predicament this article cannot be good for shareholder wealth.

[Toddy]

Fine....

The FTX shares should be put on a trading halt until either the Banks can give assurance of solvency or the potential investor fronts up with the cash.

Where is the regulation!!! Get real NZX!!!

[kura]

Excuse my ignorance Toddy, but isn't it against the law to continue to trade if one is insolvent ?

[winner69]

quote:Originally posted by belgarion

....
Thus a re-capitalisation is simply transferring 'ownership' from the bank to the new holders. We'll supply equity to reduce debt ... Thank you very much. :)


That is pretty succint belg .... clearer than mud eh

Shame that the $254 raised in the IPO didn't 'go into' the company eh ..... $200M plus to the vendors and $40M odd to the bondholders who had earlier given some money to the banks ...... and those still holding have seen most of that gone .... tough world eh

[D_Pick]

belgarion, following on with this logic I assume the NZX should not have intervened last time round with their "continuous diclosure enquiry" and settlement amount of $150k. Now that a precedent has been set though, if the NZX wishes to be consistent then this latest fiasco should be subject to a similar continuous disclosure enquiry and subsequent monetary settlement/fine.

On your other point if the banks were so happy with the previous status quo, all that 'I' expense in EBITDA then why would they want to change the status quo. I assume that they were worried that FTX would not be able to service its 'I' payments as the housing market cools and FTX's EBITDA declines, and posibly even lose some of thier loan money. I'm assuming that carpet manufacturers are cyclical and revenues and EBITDA decline as the housing market and general commercial environments cool.

Like you say 're-capitalisation' is transferring risk from the lenders back to the equity holders

[sniper]

Buy? Bye bye ....;)

[D_Pick]

If you had an 8 billion dollar opportunity (Contact energy merger) or a 50 million dollar problem (Feltex capital restructuring) which one would you focus most of your effort on?

Is Tim Saunders the best man for the Feltex chairmanship? Or does he have too many other directorship committments to add any value to FTX shareholders. If past performance is anything to go by (200 odd million shareholder value lost) he should resign.

In my opinion FTX requires a highly focused chairman with little other distractions so that some sort of shareholder wealth can be re-built. A part-timer like Tim Saunders isn't the best deal for shareholders.

I would hope the potential new investors have a conditional clause to the effect that they won't invest unless radical change occurs in the composition of the existing board of directors. This assumes that after due diligence the mystery company wants to proceed and invest in this company.

With the collapse of the Contact/Origin merger maybe Tim can finally focus more of his energy on digging Feltex out the mud hole its in now. But don't bet on it, he may not get the chance.

See article below calling for his resignation from the Contact Energy board
http://www.stuff.co.nz/stuff/0,2106,3715286a13,00.html

[sniper]

Trying to catch a falling knife is brave but plain dumb. Anyone who has bought in the last 3 months is sitting on losses needlessly sustained. Better to wait for the rights issue (if there's one). If there's none, it's bye bye.

Also, forget about continuous disclosure - can you really trust Feltex to disclose the real state of affairs as the company appears to have no ideas itself. It has blundered from one quarter to the next and things keep getting worse.

Why didn't it do a deal with Godfrey Hirst? Pride and ego or again, plain stupidity?

[warthog]

quote:Originally posted by sniper


Trying to catch a falling knife is brave but plain dumb. Anyone who has bought in the last 3 months is sitting on losses needlessly sustained. Better to wait for the rights issue (if there's one). If there's none, it's bye bye.

Also, forget about continuous disclosure - can you really trust Feltex to disclose the real state of affairs as the company appears to have no ideas itself. It has blundered from one quarter to the next and things keep getting worse.

Why didn't it do a deal with Godfrey Hirst? Pride and ego or again, plain stupidity?


Brinkmanship. And GH weren't bluffing when they said they'd walk away.

[sniper]

Brinksmanship? Makes sense and it does look like the market should have paid more attention as GH lost around $2.5m selling out of its stake. You don't take that kind of hit without being really concerned about the viability of Feltex as a going concern.

Refer below - "It gets down to perceptions of value and their assessment was different to ours." So far, GH : -$2.5m Feltex : -$200m.

Looks like Hunter Hall also made the right decision bailing out of its 10% plus stake at around 90 cents.


Hirst offloads last shares in Feltex

30.03.06
By Owen Hembry


Australian firm Godfrey Hirst has sold the last of its shares in carpet-maker Feltex after the collapse of merger talks last month.

Finance director Jim Walsh confirmed yesterday that the last remaining shares had been sold after the company had reduced its stake to 4.57 per cent last week.

"We tried hard for many months, spent quite a lot of money and we were unsuccessful and that's it. We've sold our shares and moved on," he said.

One analyst said the involvement of privately-owned Godfrey Hirst and the potential for a merger had been one of the last remaining positive elements to the stock.

Another analyst said it was possible no one had acquired more than 5 per cent "or somebody took the whole lot. If that's the case then somebody is building a position."

Shareholders with less than 5 per cent of a company do not need to inform the stock exchange about trading movements. No substantial shareholder notices have been issued.

Feltex said last month that merger talks between the two companies had been stopped with a potential deal regarded as not being in the best interest of shareholders.

Godfrey Hirst's initial merger proposal would have led to a reverse takeover of Feltex, the New Zealand carpet-maker said.

Walsh said there was no particular sticking point that led to the breakdown in talks.

"We put a proposal that we thought would have been attractive, the Feltex board had a different view and we were unable to reach agreement," he said.

"It gets down to perceptions of value and their assessment was different to ours."

After the merger talks collapsed, more discussions about a possible asset sale also failed to reach agreement. "... beyond that there was no point holding shares."

Feltex shares were steady at 38c yesterday.

[winner69]

Off course everybody trusts them .... good bunch of guys with their fingers on the pulse ..... doing all they can to resurrect the situation .... like they have been doing for years ... even before the IPO

http://www.stuff.co.nz/stuff/0,2106,3716227a13,00.html

Mr Preston said Feltex was effectively saying "trust us" to shareholders and the information it disclosed seemed to change on a weekly basis.

"I don't know why Feltex shareholders would feel inclined to trust the board or company on anything at the moment," Mr Preston said.

[winner69]

NBR says its Talleys (the fish people) having a look .... opportunistic more than anything else

Also says Talleys not the first to look over Feltex ... but ptobably the last ... no deal ... then end of Feltex

Now is the time to buy Belg

[D_Pick]

15 cents a share seems a bit rich at this point in time.

I'm making the assumption that if there was any positive news what-so-ever then the board would be racing to the newswire (and NZX of course) to get it out to the market.

A good time for sales + free underlay at your local retail carpet shop though, the double whammy of a distressed carpet maker and cooling housing markets (NZ and Australia) must be good news for home renovators and Feltex market share. Not good for profit margin however.

At some point there must be value in this company... Although betting against industry players like Godfrey Hirst and Cavalier probably isn't the best move yet... As these industry players aren't racing to invest in FTX.

In fact trading volume has been extremely light on reflection that FTX could go belly up without a new equity injection.

Anyone buying CAV in anticipation that FTX will liquidate/completely collapse?

[D_Pick]

Did someone say sell?

Hope it wasn't the institution advising FTX... or the mystery investor/saviour

[Lizard]

If Feltex goes into receivership, it will probably be kept trading and sold off as a going concern to recover as much as possible of the debt owed to the banks. Personally, would pick Godfrey Hirst rather than CAV as a likely buyer. So not necessarily of any immediate benefit to Cavalier. Eventually, might expect less competitive behaviour to emerge. My guess is that the worst of the discounting may have already occurred as Feltex sold down inventory into a cooling market and other players tried to retain share.

In addition, there might be plenty of Mum and Dad investors who feel a perverse dislike for Feltex brands after this debacle...

The numbers I've crunched look to me to be only marginally convincing for a rescue story and any attractiveness would have to assume a reasonably rapid recovery in the carpet markets, with the intention to sell out in a few years at close to the cyclical peak. The suggestion that Talleys is the interested party does little to perk my interest in this stock. To anyone who ends up making money from this situation, congratulations. But have decided it is not a stunt I am going to attempt.

[sniper]

Talley's underwrote a 1 for 1 rights issue for Affco in 2002 at 10 cents per share. Share price was over 20 cents and then, fell like a stone.

Same treatment instore fopr FTX?

[D_Pick]

Are Talley's boats carpeted?

[kura]

BUY MORE
If Belg is happy to buy at this price, how could you go wrong ???

Me ? I wouldn't touch em !

[D_Pick]

Talley's obviously liked what they saw at Affco, they are now a 50% shareholder and must have made a tidy profit on those 10 cent rights

[lanenz]

quote:Originally posted by D_Pick

Are Talley's boats carpeted?
I think that talleys want to get the license to fish for "carpet fish".

[Krustytheclown]

Maybe Hellen Clarke and the Labour Gumit are looking at rescuing FTX.......they are BIG time Carpet Munchers...fishy story indeed!

Is that why Belg' is a BIG FTX fan??????

G.

[sniper]

quote:Originally posted by belgarion

W69 ... The problem was the IPO, was it not? ... However, even dogs have their value ...

I am sorry that many have lost their shirts due to skuldugery/marketing hype/ etc. ... That said ... There are no major institutions on the share register ... Could that be becuase some did their homework better than others?

At a point, FTX does have value ... I feel that point has been reached.

What needs to happen is that enough holders show up and vote for a 're-cap' ...

Will you be one of those? ... I will be.

It's a dirty, horrible, dog-eat-dog world ... And yes ... I am part of it. Feel free to benefit from my/others actions for the good of ourselves; ... and the 900 odd people that FTX employs. ;)

Call me "Gecko" if you like ... It may, in this instance, be missing the point ... At least I hope the FTX employees would agree ...


Could have bought cheaper again today, eh? Any fingers left? ;)

[sniper]

Read NBR today and it looks like if Talley's walk away, it's curtains [xx(] for Feltex. 50/50 ....:(

Also, Shoeshine asks some very pertinent questions of FTX directors - like, how does 'the company evaluating equity raising options' on 7 June make clear that 'capital raising is fundamental to the future of the company' in the latest release?

let's hope they do a deal as NZ could do with a turnaround story. :)

[Toddy]

Does anyone know what the NZX record is for the shortest time period from an IPO to bust.

[winner69]

One of Shoeshines other question was 'Will the goodwill of $28M be written of this financial year?'

Good question and as i pointed out earlier if this was done Feltex's equity falls to $40M .... something that bankers and prospective investors would be aware off

Sort of suggests that 'balancing' debt / equity levels does require a very sizable capital injection ..... more than just topping up the petty cash tin

The greater the amount of 'new capital' the greater the dilution of existing shareholders .... and then to be asked for more in a rights issue .... well what more need be said.

[sniper]

Traders getting burnt on the way down .... looking more like RMG everyday. All the way down to zero it was for RMG - capital injections after capital injections too.

Talley's rescue is 50/50 .... ANZ will put FTX into receivership if Talley's walk.

Keep buying, Belg. Just keep buying. :D

[kura]

quote:Originally posted by Toddy

Does anyone know what the NZX record is for the shortest time period from an IPO to bust.


Don't know about NZX, but for ASX the record is about 3 months ! (Credit where credit is due, as least the Ozzies know how to put a sick doggie out of its misery quickly )

[Lizard]

quote:Originally posted by kura
(Credit where credit is due, as least the Ozzies know how to put a sick doggie out of its misery quickly )


Really? One of my biggest moans about the ASX is that there are so many dog companies that have been kept alive by endless equity raisings in various guises when they should have been allowed to fail and saved countless shareholders from serial losses.

[kura]

Good luck to you Belg, Myself I freely admit my errors (ie like CRS, on ASX, just before trading suspended) but you never seem to confess yours, if you were happy enough buying prior to recent announcements, then following your logic, (and recent posts) you will be absolutely ecstatic once the recievers are appointed ????

Regards the "I" in "EBITDA" I confess to being old enough to remember paying 19% interest on my mortgage, just think how that much "I" would affect your valuation then.

I have no problem if you are just having a punt on a "fragile" conmpany, but your comments appear to encourage others to buy into this "walking dead corpse" in this respect I think your actions are reprehensible.

[sniper]

EBITDA, Belgarion? Earnings Before I Totally Duped Auditors.

"Mr Buffett was particularly critical of the trend to report Ebitda -earnings before interest, tax, depreciation and amortisation - which became popular in the 90s and remain so today. His long-time business partner at investment fund Berkshire Hathaway, Charlie Munger, summed up their attitude: "Wherever you read Ebitda, you should substitute it with 'bull**** earnings'. "

http://www.buzzle.com/editorials/5-4-2003-39932.asp

Kura - Belgarion has every right to recommend FTX. That's what this forum is for and there are plenty of cautionary postings as well.

[winner69]

quote:Originally posted by kura



I have no problem if you are just having a punt on a "fragile" conmpany, but your comments appear to encourage others to buy into this "walking dead corpse" in this respect I think your actions are reprehensible.



Hey Mr Kura .... lets assume that somebody pumps $100M into Feltex tomorrow and brings in some fantastic management and Feltex achieve what they said would in the way of earnings ...... Feltex becomes a $100M company and Belg is rich ..... and we didn't believe him

Ever thought Belg could be right .... remember when Tower was going broke

[kura]

OK fair comment guys, I won't badmouth Belg no more.

[sniper]

quote:Originally posted by winner69


quote:Originally posted by kura



I have no problem if you are just having a punt on a "fragile" conmpany, but your comments appear to encourage others to buy into this "walking dead corpse" in this respect I think your actions are reprehensible.



Hey Mr Kura .... lets assume that somebody pumps $100M into Feltex tomorrow and brings in some fantastic management and Feltex achieve what they said would in the way of earnings ...... Feltex becomes a $100M company and Belg is rich ..... and we didn't believe him

Ever thought Belg could be right .... remember when Tower was going broke


Pumps $100m in and it becomes a $100m company? Means company now is worth zilch. Cero. [xx(]

[winner69]

quote:Originally posted by sniper

Pumps $100m in and it becomes a $100m company? Means company now is worth zilch. Cero. [xx(]



Zilch could be right sniper but I meant to say something like $300M and Belg would be rich

Big question though is whether somebody like talleys can bring any value to feltex (besides cash)

Probably an opportunistic punt by them .... inject some cash to keep feltex going for a little longer .... underwrite a heavily discounted rights issue and dilute current shareholders interests more ..... sack another few hundred of the workers belg seems to want to keep ... have a good years result and hock the lot off.

Maybe a scenario thta is a bit far fetched ..... but then what would be their intentions?

[D_Pick]

The reason why Talley's may be considering investing in FTX (if indeed they are the mystery investor) is to make money. Just like anyone who has taken a punt since the trading halt having seen the shareprice drop 38%.

Why does Talley's (or any new investor for that matter) need to add anything apart from capital for FTX to turnaround. My view is that FTX would be a solid company if it's balance sheet was structured more conservatively, with much less debt.

Feltex has a good revenue base (300 odd million), high market share in NZ and Australia, an established manufacturing base and workforce, and strong family of brands.

The fact that FTX is not in breach of it's banking convenant's from a monetary sense implies that they have good enough cashflows to support high levels of debt. It would be interesting to know what banking convenant was breached?

My understanding is that FTX's manufacturing machines are up to date technologically with some newish machinery, so really this company mainly requires less debt to turn it around.... and a new Chairman so that market perception can change into a turnaround story.

FTX has been on the back foot since the IPO as it listed with too much debt, really it was an opportunistic exit by a private equity company.

Since the IPO and after all the interim issues FTX have had one would hope that the board and senior management are now very focused on reducing debt, and improving profitability as they continue to be put under the microscrope by Shareholders and the media.

With a bit of fresh capital to pay down debt this share could come out quite strong.

I'm starting to think the 15-22 cent range could be a good entry point for FTX. Time will tell.

[D_Pick]

The redeeming feature for Feltex in my view is their mature product.... carpet

Who doesn't have some carpet in their home or at work?

[lanenz]

quote:Originally posted by D_Pick

The redeeming feature for Feltex in my view is their mature product.... carpet

Who doesn't have some carpet in their home or at work?
Its just now that would you pay for carpet that you havent yet received?

[warthog]

quote:Originally posted by D_Pick

The redeeming feature for Feltex in my view is their mature product.... carpet

Who doesn't have some carpet in their home or at work?


The warthog doesn't, at home or work.

[steve fleming]

quote:Originally posted by D_Pick

The redeeming feature for Feltex in my view is their mature product.... carpet

Who doesn't have some carpet in their home or at work?


Dunno about in NZ, but here in Australia, wooden floor boards are all the go...carpets are hardly anywhere to be seen

[sniper]

So Feltex has been given 3 weeks according to Star Times this morning to rectify breaches banking covenants.

Watch the Talley's play this one to the last day ... and then, like Godfrey Hirst, walk away?

Great trading opportunities in the next 2 weeks. The clock is ticking .....

[sniper]

quote:Originally posted by D_Pick

The redeeming feature for Feltex in my view is their mature product.... carpet

Who doesn't have some carpet in their home or at work?


A bit like saying that Fortex's redeeming feature is its mature product .... meat.

Who doesn't have some meat in their home and at work?

Good logic, Belgarion? Better than EBITDA huh?[}:)]

[lanenz]

Bel... That last sentence would actually worry me. its like saying that we currently are but there is no mention of its ability to in the future. It all depends on how you interpret it

[winner69]

Yesterdays paper said a rights issue at 10 cents .... and the new 'cornerstone' investor ending up with 57% (or up to 78%) of Feltex.

http://www.stuff.co.nz/stuff/0,2106,3719073a13,00.html

[sniper]

quote:Originally posted by lanenz

Bel... That last sentence would actually worry me. its like saying that we currently are but there is no mention of its ability to in the future. It all depends on how you interpret it


That's it in a nut-shell, isn't it? According to the NBR (and its seemingly accurate source so far), it is high noon for Feltex with its Bank.

Either Talley's come in with capital and existing shareholders stump up with more capital (after losing 87% of their original capital already) or it's over.

Clock is ticking .... don't expect an announcement anytime soon. Talley's know how to negotiate.

The Feltex management and Board have so far shown themselves to be like a bunch of nerdy school-boys at their first school ball. All sweaty, hot and bothered with false anticipations and too tongue-tied and groin-challenged to talk properly. We all know what happens to school-boys like those. ;)

[minimoke]

It must be a great time for buying carpet though. Check out where Feltex carpet is on special. You might get a better return on your cash by buying the carpet rather than the shares. The risk might be buying your carpet now or waiting for three months on the chance that there is a “closing down” super special.

[D_Pick]

quote:
Originally posted by steve fleming

Dunno about in NZ, but here in Australia, wooden floor boards are all the go...carpets are hardly anywhere to be seen


Some people in Oz must like/buy carpet flooring. From the FTX investment statement (dated May 5th 2004 - sourced from the Australian Carpet Institute) the Australian market size is approx 50 million square meters per annum.

NZ market is around 9-10m square meters per annum.

Combined Aus and NZ is a 60 million sqm market.

Therefore demand for carpet in the combined Australasian market isn't going to dissappear over-night.

[D_Pick]

I can't see any meaty benefits in Affco and Feltex merging sniper?

Banks appeased until end of Sept, high noon has been delayed.... If ANZ National thought FTX couldn't survive another three months then this extension wouldn't have been granted.

http://stocknessmonster.com/news-item?S=FTX&E=NZSE&N=133523

FTX isn't out the toilet yet, but they aren't dead either.

[DCski13]

Well, I'm in. Have dumped TEL - and far too late for sensible trading - and bought 28k. Mores the pitty I don't have a home to carpet!!

[Fodder]

quote:Originally posted by DCski13

Well, I'm in. Have dumped TEL - and far too late for sensible trading - and bought 28k. Mores the pitty I don't have a home to carpet!!


Talk about "out of the frying pan and into the fire" DC... good luck... worth a punt, but only if you got nothing to loose.

[lanenz]

quote:Originally posted by Fodder


quote:Originally posted by DCski13

Well, I'm in. Have dumped TEL - and far too late for sensible trading - and bought 28k. Mores the pitty I don't have a home to carpet!!


Talk about "out of the frying pan and into the fire" DC... good luck... worth a punt, but only if you got nothing to loose.
It doesnt look like he has anything to lose. Sounds like Cujodoggy's mate

[sniper]

One must feel extreme anger at the board and management of Feltex for the mess that they have presided over with this once proud NZ company with an iconic brand. And what kind of spines do they have for not being totally frank with shareholders?

Question : 'Exploring equity raising options' in 2 weeks become 'equity raising fundamental to future of company'?

We had Sam Magill on safari in Africa (really) when the company issued its first profit downgrade last year. Now we have the directors and management hiding behind a PR firm (according to NBR) - instead of fronting up and telling the whole truth to mullet-stunned shareholders. What a disgrace.

Whatever happens, let's hope this company survives and we get to ask some hard questions at the company's AGM or EGM (with a capital raising.

BRING IT ON, you @#$@@#:(

[D_Pick]

NZX announcement was timely indeed, it kept the shareprice stable today.

Yep the deck is being shuffled each day, and new shareholder structure will no doubt appear over the next few months.

Gut feel is that the rights issue will be somewhere between 15 and 25 cents a share.

[Toddy]

INVESTOR PULLS OUT!!!

FORECAST: FTX: UPDATE ON POTENTIAL INVESTOR AND TRADING PERFORMANCE 09:48am
FTX
04/07/2006
FORECAST

REL: 0948 HRS Feltex Carpets Limited

FORECAST: FTX: UPDATE ON POTENTIAL INVESTOR AND TRADING PERFORMANCE

Following the completion of the financial year Feltex Carpets wishes to
provide an immediate update of trading performance. It is also wishes to
advise the market of the status of the capital raising and restructuring
options the Company is assessing.

On 23 June the Company advised the market of a potential cornerstone investor
in Feltex. Since that date the potential investor sought to significantly
revise the fundamental terms and structure of its proposal in ways, which the
board believes, would have been unfair to shareholders and other stakeholders
of the Company. That investor has now withdrawn its proposal. Expressions
of interest have been received from other potential investors and the Company
is now able to hold discussions with them.

Preliminary financial results for the year will be released as soon as they
have been compiled and reviewed by the board. They are expected to be in
line with those foreshadowed on 7 June. Sales in June were satisfactory in
both Australia and New Zealand, slightly exceeding internal targets. The
average daily sales volume for June 2006 was the second highest of any month
of the financial year. The forward sales order book remains healthy, which
presents a positive short-term outlook. Current and projected gross margins
are showing signs of improvement.

Ends.

[winner69]

At least the board ain'g going to be screwed and are going to protect shareholders 'interest' to the hilt .... but oneday they will need to realise that white knights need to rewarded for the real risk they would be taking

Quote Feltex Since that date the potential investor sought to significantly revise the fundamental terms and structure of its proposal in ways, which the board believes, would have been unfair to shareholders and other stakeholders
of the Company.

[port hills]

Since that date the potential investor sought to significantly
revise the fundamental terms and structure of its proposal in ways, which the
board believes, would have been unfair to shareholders and other stakeholders
of the Company. .

Haha.. The board doesn't want anyone being unfair to the shareholders, don't they think that perhaps their actions and lack of actions over the past couple of years could be considered unfair to the shareholders? [:0]

[DCski13]

Hm, I must be missing something here. Forget the rights issue. ANZ could simply turn debt into equity as in the case of Scotts company out of Taraunga. Having said that, is this a last stand strategy after trying to convience someone else to take the problem off their hands. I'm guessing that if FTX can't raise $30 odd mill in equity, the bank will do the decent thing in the name of their balance sheet and the negative low on effect to other ANZ customers and become a shareholder.

[COLIN]

quote:Originally posted by port hills




Since that date the potential investor sought to significantly
revise the fundamental terms and structure of its proposal in ways, which the
board believes, would have been unfair to shareholders and other stakeholders
of the Company. .

Haha.. The board doesn't want anyone being unfair to the shareholders, don't they think that perhaps their actions and lack of actions over the past couple of years could be considered unfair to the shareholders? [:0]





There is an ancient Chinese saying, which goes something like this:

The cockroach is never in the right where the fowl is concerned.
In the West we have another saying:
Beggars can't be choosers.

Like it or not, any options for FTX that would now be "fair" to shareholders have long since been allowed to evaporate. I know too much about banks to think otherwise, believe me.

[D_Pick]

Await news of the next potential investor and terms with interest......and the preliminary full year financial results

Via this latest announcement the board & management have clearly signalled that they feel the company has options. Especially if they are willing to turn away a potential investor if the terms aren't right.

[winner69]

quote:Originally posted by D_Pick

Via this latest announcement the board & management have clearly signalled that they feel the company has options. Especially if they are willing to turn away a potential investor if the terms aren't right.





.... so it is a case of trust us, we know what we are doing eh

[barney]

Trouble is that all the while Feltex's negotiating strength,which probably is not much,keeps slipping away.Hence any future deals may be even more opportunistic than the last.

[sniper]

quote:Originally posted by D_Pick

Await news of the next potential investor and terms with interest......and the preliminary full year financial results

Via this latest announcement the board & management have clearly signalled that they feel the company has options. Especially if they are willing to turn away a potential investor if the terms aren't right.




PR speak from FTX really. Talley's obviously found same problems as Godfrey Hirst did and made an offer that FTX had to refuse.

Remember that Feltex turned down Godfrey Hirst a few months ago and got itself into deeper strife.

[Lizard]

The most intriguing part of todays announcement was the part that said "would have been unfair to shareholders and other stakeholders of the Company".

Who are these stakeholders that would have been negatively affected by the proposal? The creditors? The banks? The employees? The Directors? Wouldn't the first two of these be expected to benefit from any equity raising...?

[winner69]

The I in EBITDA isn't the only problem with Feltex .... it essentially that they don't make enough EBITDA in the first place.

The Feltex business model seems to be inferior to their peers ... somebody did a margin comparison with CAV some time ago.

Their EBITDA history from 2001 is $17M, $12M $31M, $46M, $34M last year and something like $20M this.

Hardly inspiring is it .... a couple of reasonable years at the top of the cycle .... and when the market conditions get a bit tough its all down hill ... no resilience in the business model at all

Many fundamental changes have to be made ... whether product mix, costs, pricinf or whatever if Feltex is to have a future

Thomas is not the man to do it .... he has been there all the time through many years of pretty abysmal performance

No doubt it is this fundamantal weakness in the Feltex business model that made it all too hard for Hirst or talleys to make a decent return ... unless they ended up with most of the company to compensate them for the risk involved.

[sniper]

Here's a clean-up of FTX's balance sheet :

Equity as at 31 December 2005 $70.2m
Less - deferred income tax asset 16.6m
Less - intangibles 29.6m
Less - estimated loss 2nd half 10.0m
Net tangible equity $14.0m

This to support $129m of debt? No wonder 'equity raising is fundamental to the future of the company.' [xx(]

[Toddy]

Sniper

Is the $14m represented by goodwill on the balance sheet. otherwise I cannot see it.

[winner69]

Sniper ... are you saying that is really one sick dog?

And to think that $40M of that $70M starting figure you used was new capital put in just 2 years ago

[winner69]

quote:Originally posted by sniper



Sales in June were satisfactory in both Australia and New Zealand, slightly exceeding internal targets. Notice we said sales - not profits or margins because we are having to firesale stock to keep the wolves from the door.



Even at firesale prices they apparently can't get rid some of the old stock ... deleted ranges/patterns etc nobody wants

Probably the stock figures in the balance sheet are overstated as well .... expect some stock writedowns as well when the final accounts come out

[winner69]

quote:Originally posted by Toddy

Sniper

Is the $14m represented by goodwill on the balance sheet. otherwise I cannot see it.


Goodwill is the $29M odd intangibles sniper mentioned

[sniper]

W69, I am so damn angry and mad with the Board and management of this company.

As Brian Gaynor pointed out in his Herald column on Saturday, the Board and management were incentivised to squeeze as much out of new shareholders at the IPO in favour of the private equity vendors.

They signed off on projections (that's the loophole) that proved to be grossly inaccurate.

They were fined by the NZX for non-admission of breach of NZX rules - paid by shareholders!

Then they were caught with their pants down by the NBR article (after trying to hide their real state) and then, exposed again with Talley's. Potential investor, my big feet.

And per today's statement they are still trying to fog shareholders with PR speak (no doubt written by a PR firm paid for by shareholders).

In answer to your question, W69, this dog is not only sick but is in danger of being put down unless someone can really see value enough to put in plenty of new equity. So far, nobody else can. :(

[winner69]

quote:Originally posted by sniper


W69, I am so damn angry and mad with the Board and management of this company.

As Brian Gaynor pointed out in his Herald column on Saturday, the Board and management were incentivised to squeeze as much out of new shareholders at the IPO in favour of the private equity vendors.



If gaynors sums are right pretty astounding what these characters got to make the IPO a huge success. From gaynors column

Tim Saunders (chairman) $1.7 million

- Sam Magill (CEO) $8.4 million

- Michael Feeney $0.75 million

- Craig Horrocks $0.88 million

- David Hunter $0.75 million

- Peter Thomas $1.78 million.

[lanenz]

Sam is smiling all the way to his luxury pad but there is no doubting Thomas

[winner69]

So the Hirst ofer was at 60 cents
http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10389758

Not in the best interests of shareholders Feltex says .... maybe the next offer will be for a $1 .... TRUST US Tim and Peter say

[sniper]

What did Godfrey Hirst wanted though for its own market capitalisation in the merger proposed?

Case of 1 for FTX and 3 for Hirst?

[D_Pick]

quote:

Originally posted by sniper

Here's a clean-up of FTX's balance sheet :

Equity as at 31 December 2005 $70.2m
Less - deferred income tax asset 16.6m
Less - intangibles 29.6m
Less - estimated loss 2nd half 10.0m
Net tangible equity $14.0m

This to support $129m of debt? No wonder 'equity raising is fundamental to the future of the company.'



Shouldn't the deferred tax asset be included as equity for analysis, unless this amount is not expected to reverse in the future?

14m + 16.6m = 30.6m ... which is the rough market value today.

Additionally having intangibles of zero value for a brand like Feltex is unrealistic in my view. There has to be some value placed on the Feltex brands.

[COLIN]

quote:Originally posted by D_Pick


quote:

Originally posted by sniper

Here's a clean-up of FTX's balance sheet :

Equity as at 31 December 2005 $70.2m
Less - deferred income tax asset 16.6m
Less - intangibles 29.6m
Less - estimated loss 2nd half 10.0m
Net tangible equity $14.0m

This to support $129m of debt? No wonder 'equity raising is fundamental to the future of the company.'



Shouldn't the deferred tax asset be included as equity for analysis, unless this amount is not expected to reverse in the future?

14m + 16.6m = 30.6m ... which is the rough market value today.

Additionally having intangibles of zero value for a brand like Feltex is unrealistic in my view. There has to be some value placed on the Feltex brands.


Isn't there still a requirement that tax losses can only be carried forward if there is no more than a 40% change in ownership of the company? Otherwise this "benefit" evaporates.

[D_Pick]

There are a few positives in this article

http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10389760

At these levels 20-22 cents a share, taking the view the company can trade past the end of Sept 2006, and new equity is raised then the current price is good value. If you take the view that the company can "flourish again" then it's great value.

Additionally there is some option value in the shareprice that a competitor or new investor may take a controlling interest or launch a complete takeover.

[winner69]

This article in The Independent says feltex shares at the moment are worthless

http://www.theindependent.co.nz/story1.html

Feltex rescuer walks
Denise McNabb
FELTEX is at the mercy of its bankers after talks with a white knight investor broke down yesterday.

The carpet-maker must now find a rescuer willing to stump up at least $57.25 million and improve its earnings to cover debt and avoid collapse.

"Mum and Dad" investors, the only ones left in the company, face losing most of the remaining value in shares many bought at $1.70 two years ago even if a rescue goes ahead.

The $57.25 million price tag on a rescue bid is the amount Feltex is in breach of its banking covenants with ANZ Bank, which has lent it $129 million. Analysts say Feltex would also have to lift forecast underlying earnings by two-thirds before any other suitor would see value in the company.

If a rescue bidder cannot be found, shareholders face having to bail out in a heavily dilutive rights issue that would drive the share price into penny dreadful territory. Even with a rescue, small shareholders face a dilutive share issue.

Feltex shares slumped 14% to 19 cents yesterday after it disclosed a potential cornerstone investor had pulled out of talks after trying to revise the terms of a deal.

Last week the National Business Review reported South Island fishing company Talley's was doing due diligence on Feltex. Neither company would confirm this but Feltex told the NZX yesterday that the party it said on 23 June was interested in a cornerstone stake in Feltex had withdrawn the proposal.

"Since that date the potential investor sought to significantly revise the fundamental terms and structure of its proposal in ways, which the board believes, would have been unfair to shareholders and other stakeholders of the company," Feltex said as the market opened yesterday.

The company also said preliminary financial results for the June year would be released as soon as they had been compiled and reviewed by the board.

They were expected to be in line with those foreshadowed on 7 June of $20 million-$21 million earnings.

But that might not be enough to rescue Feltex, according to the banking covenant terms of its senior debt facility outlined in its 2003 investment statement and prospectus for the issue of $50 million of bonds.

It says the necessary ratio of earnings before interest, tax, depreciation and amortisation (EBITDA) to senior debt is 3.5 times.

Banks don't use financial forecasts, but even if they did use Feltex's forecast earnings of a mid-point $20.5 million this financial year, 3.5 times that figure would come to $71.75 million.

With debt of $129 million, that leaves a $57.25 million shortfall.

When a suitor looked at EBITDA for valuation purposes, it would take out the Australian strategic investment programme (SIP) subsidy based on capital expenditure rebates and innovation expenditure.

TAKING out SIP of $5.2 million in the latest accounts would leave earnings of $15.3 million.

When Feltex floated in 2004 the company was valued at an EBITDA multiple of 6.7 times. Using this multiple on $15.3 million brings the company's value to $102.5 million, $16.5 million short of covering the debt of $129 million.

One analyst, who declined to be named, said it would be realistic for a rescue bidder to pay no more than 5.5 times EBITDA to reflect the risk of the company.

This implied a bid of $84.15 million, or $44.85 million short of the amount needed to cover bank debt.

Feltex would therefore need to increase underlying EBITDA by 69% to $25.8 million to cover debt before any value could accrue to shareholders, the analyst said.

This implies that the existing shares are worth nothing without a significant improvement in earnings.

Late yesterday Feltex Chairman Tim Saunders said the board didn't want to dilute shareholder value. But he would not rule out a bidder for Feltex either making a rights issue of ordinary shares or issuing convertible preference shares under a "restructuring."

[Footsie]

i'd have to agree with the independent...

maybe worth 5-10c

[D_Pick]

He added that a complete takeover of Feltex is possible [^]

[lanenz]

quote:Originally posted by D_Pick

He added that a complete takeover of Feltex is possible [^]


But not at current prices.

what a bloody sad tale this stock has become or always were.

[winner69]

quote:Originally posted by D_Pick

He added that a complete takeover of Feltex is possible [^]




So how much would you pay to takeover Feltex .... Y cents per share?

Total cost then 150 million X Ycents plus $130M

Would you?

[winner69]

quote:Originally posted by Footsie

i'd have to agree with the independent...

maybe worth 5-10c


agree? but the Independent said worthless

[bermuda]

Unfortunately for the small shareholders their Board of Directors let them down.

The Godfrey Hurst offer was a good one but the Feltex Directors couldnt swallow their pride and accept it.

My how they must be wishing they had accepted the offer when it was on the table.Now all they can look forward to is penny dreadful status.This has been a real tragedy.

[D_Pick]

sniper you raise some fair points here.

I wasn't a shareholder at the IPO, and haven't been a shareholder until recently. In at an average price of 21 cents, so I don't have that passion against FTX board and management that a few long suffering shareholders do.

From my own research over the last month or two I've talked with some Feltex employee's (they mentioned that Peter Thomas has good support internally, more so that Sam Magill did), visited and talked with a few carpet retailers about the product and competition, been through the FTX financial reports, read a lot of media commentary (NBR included), and read some analyst reports and sharetrader views.

After the above background today I'm ok being a shareholder, and will take my chances that a positive outcome can be reached for existing shareholders.

We are all vultures and so calling any potential new investor a vulture fund is fine by me. All investors should be striving to invest on the best terms possible for their own circumstances.

The NBR has been good for those of us who wanted to get into FTX at a cheaper price, but remember that at the end of the day the NBR's reason for being is to sell newspapers and so the more sensational a story the better.

The ANZ national is a better source and they haven't called in the receivers yet.

Most if not all listed companies use some form of PR services, so this is nothing new or anything to get excited about.

Tim Saunders who I believe needs to go in the future to help support any turnaround story, needs to stay in the short term for continuity purposes until he and the rest of the board can agree on a suitable restructuring plan. As the board didn't agree terms with this latest mystery investor then they must believe that a better deal can be found.

.. and finally if existing shareholders don't like FTX's chances then they can always sell. For now there has been plenty of support around the 20-22 cent level

[Toddy]

D Pick

You should have saved yourself some time and gone straight to the tea lady. She told me that the biscuit tin has not been filled for some time now.

She also said that if I really wanted to take a punt then there is a good mut running in the second on Saturday that is odds on to come in called Receiver. www.tab.co.nz

[D_Pick]

It was the tea lady I spoke with Toddy

www.nzx.co.nz is more fun than the dogs

[DCski13]

GREAT SCOTT!! Now I'm making money, FTX up 1c on my purchase price (as of 20 min. ago)

[DCski13]

I'm hanging in there (and after having an eye poked out by my broker selling me TEL at it's height. I'm working for recovery)

Hey, belgarion. Why not go for 5% (sorry, don't really know the diff.)

[Fodder]

quote:Aussie rival may yet snap up Feltex
06 July 2006
By ANDREW JANES

Australian rival Godfrey Hirst may yet come to Feltex's rescue if the struggling carpet-maker is honest about its prospects, according to a source close to the Australian company.


But any rescue would probably depend on how much pressure Feltex's bank – the ANZ – put on it to stitch up a deal with an investor, the source said.

"Many commentators would say that the (Feltex) board has an unreasonably optimistic view of where the company is at.

"But if Feltex's view has changed or if there is sufficient pressure from their bank to cause people to be a

bit more realistic, Godfrey Hirst might look at it again if it was invited to.

"But Godfrey Hirst doesn't know to what extent the bank is really involved," the source said.

"If they (the bank) are saying you must do a deal then circumstances might change a little bit, attitudes around value might change a bit."

AdvertisementAdvertisementHeavily indebted Feltex had been in talks with an unnamed prospective investor, believed to be Talley's Fisheries, but this week the prospect evaporated.

ANZ has given Feltex a three-month reprieve after the carpet firm breached terms of its loan facility.

It is understood that the bank is taking a hands-on role in overseeing the management of Feltex.

Godfrey Hirst proposed a reverse takeover with Feltex last year, but in February Feltex said the offer was inadequate and not in the interests of shareholders.

The two could not agree on the relative values of each company. Godfrey Hirst has since sold its 8.7 per cent stake in Feltex.

"Over the years Godfrey Hirst has made a a number of approaches, some on the record, some more informal (to Feltex)," the source said.

"But they haven't really managed to reach any common ground.

"Feltex has always thought there was something better on the horizon."

Another industry source said the reverse takeover of Feltex by Godfrey Hirst would have created a company with a share value of more than 80 cents.

The merger would have had synergies of at least $20 million but would also have meant plant rationalisation and more job losses, the source said.

The dominant force in the company was chief executive Peter Thomas, not chairman Tim Saunders.

Mr Thomas has been associated with Feltex for several years. He was a director of Feltex when Credit Suisse First Boston Private Equity owned it and sold it to the public in 2004 for a big profit.

Feltex's prospectus for the offering of shares to the public says Mr Thomas was entitled to part of the proceeds of the sale of Credit Suisse's shares to the public.

On Tuesday Mr Saunders said the company had no intention of making any changes to management or the board.

"We have made significant changes to management. That doesn't mean we won't make more changes. But we're actually pretty comfortable with the way this management team is moving ahead.

"From the board's point of view, we've basically just got our nose to the grindstone and we're just keeping pushing along," Mr Saunders said.

"At some stage, when we're out of this mire, we will review the position (of the board) and there may be discussions then."

He understood the frustrations of investors.

"We're all investors ourselves and we're equally frustrated."




"We have made significant changes to management. That doesn't mean we won't make more changes. But we're actually pretty comfortable with the way this management team is moving ahead."

HUH? Comfortable?

Is anyone able to confirm the rumour that the Feltex Director's Boardroom is actually located on Fantasy Island?

[winner69]

Lizard ... read Chalkie in The Independent


YOU ARE FAMOUS
and Chalkie says you have perspicacity

[DCski13]

Ok, so what is FTX board's motivation. Everyone is saying they are out-to-lunch but, really, what are they trying to achieve - reputation, belief in their ability to perform, knowing the game and brinkmanship. They are NOT on Fantacy Island. Their mates are fellow directors (and probably on the board of ANZ), their children and grandchildren attend the same schools. There is a future after FTX and its shareholders. The directors don't REALLY need the money but fair reward for fair ability/performance - there is only so much one can happily spend in a life time. Few idiots make it to their level (and more idiots trade shares than anyone else and buy lotto tickets toboot). Come on - GET REAL! The board is in it for 'doing the business'. I'd love to be where they are. The adrenaline rush would be better than being on FANTASY Island and there is nothing like loosing a few nights sleep over a number of months working out a problem (these guys won't be loosing sleep).

[Lizard]

Winner, you've just made me choke on my coffee....again!

[winner69]

Lizard .... fancy being mentioned in the same breath as the esteemed First NZ Capital's Andrew Mortimer and ABN Amro's Dennis Lee

[Lizard]

I guess that ruins my chances of a job at FNZC or ABN Amro then....[:p]

[winner69]

... and even more press
http://www.stuff.co.nz/stuff/0,2106,3726309a13,00.html


Poor Phil from Waiheke happy to accept less than 45 cents for each of his 1.4 million share .... and then go and buy a lotto ticket. Lucky Phil averaged down .... his shares on the average cost him only $1.20

Even Paul who thought he got a bargain at 45 cents for his 1.5 million shares is pissed off, esp when he heard that Hirst offered 60 cents

And all Tim and Peter can say is TRUST US .... we have your interests at heart

[warthog]

quote:Originally posted by winner69

... and even more press
http://www.stuff.co.nz/stuff/0,2106,3726309a13,00.html


Poor Phil from Waiheke happy to accept less than 45 cents for each of his 1.4 million share .... and then go and buy a lotto ticket. Lucky Phil averaged down .... his shares on the average cost him only $1.20

Even Paul who thought he got a bargain at 45 cents for his 1.5 million shares is pissed off, esp when he heard that Hirst offered 60 cents

And all Tim and Peter can say is TRUST US .... we have your interests at heart


Is this a case of robbing Paul to pay Peter? ;)

[lanenz]

I think the only thing that will save Feltex now is Godfrey Hirst. If that is the case then the offer will be significantly lower than the previous one. It will need a minor miracle to turn this stock around IMO. The co is still struggling with disclosure and only telling half the story. Saunders words are not convincing at all

[trackers]

What I wouldn't give to be a fly on the wall at Godfrey - they must be laughing their heads off over this fiasco

[minimoke]

So here’s a left field thought. What about a buy out from FBU?

With projects like Jacks Point, Auckland University business school; Holiday Inn, Wellington's Maritime Building; Viaduct Basin hotel and St Patrick's Catholic Cathedral there has to be a bit of internal demand for carpet. Add in a FBU need to acquire, some FTX tax losses, decent FBU board and management and an FBU established supply lines there could be potential!

[sniper]

quote:Originally posted by MoSteph

GGood thinkin!

However, I'm going with Air NZ doing the salvaging. Obviously they're passionate about carpet: just check their planes and their uniforms. Rapid supply chains. Fabulous management. Not to mention carpeting luggage belts is value-adding rage in the US.



Brilliant! :D

[Krustytheclown]

It seems the Colonel Saunders has DEEP FRIED the poor FTX shareholders........now he cant even sell the chicken for a profit.

I am feeling for the FTX lot - the sellers in the IPO really did you lot over....hope you can lick your savage wounds and eventually move on. We all eventually take losses like this......I hope a saviour emerges.

G.

[winner69]

quote:Originally posted by minimoke

So here’s a left field thought. What about a buy out from FBU?




Unlikely if you believe what Waters said in a recent interview about FBU acquisitions -


Having got that clarity of purpose, we then developed our acquisition criteria so we could enter our chosen markets. It's very important you do this up-front – it's easy to be opportunistic about acquisitions and then develop a strategic rationale for them after the event! You also have to be realistic about your abilities to run and change a business – we were not interested in turnarounds. As Warren Buffett said about his own company, we are not tiger slayers – we only buy good businesses because we don't think we have the ability to fix bad ones! I have very much the same view.

[D_Pick]

Anyone have their garage carpeted? How about Stagecoach buses, or Toll's trains [:p]

There appears to be many options to add value to FTX today (at 24 cents a share)

* New Equity (from new or existing investors)
* Selling bits of the business (single brands or manufacturing plants)
* Complete takeover by an interested party (Private Equity or Competitor)

Has anyone read the following report "Carpets (Wall-to-Wall)" published Oct 2005. I haven't as it costs US$3950 to buy. The report appears to take a global look at the carpet market through to 2010.
http://www.the-infoshop.com/study/go20761_carpets_toc.html

Taken from the link above is a list of 104 competitors in the carpet industry globally. A few potential sniffers/investors in this list one would expect.

1.Adam Carpets Ltd. (UK)IV-1
2.Allied Carpets (UK)IV-1
3.ANKER-Teppichboden Gebr Schoeller GmbH Co., KG. (Germany)IV-1
4.Autex Industries Limited (New Zealand)IV-2
5.Axminster Carpets Ltd. (UK)IV-4
Curragh Tintawn Carpets Ltd. (Ireland)IV-5
6.B.I.C. Carpets NV (Belgium)IV-6
7.Bajong Carpets NV (Belgium)IV-8
8.Balta Industries NV (Belgium)IV-9
9.Bartex SCRL (Belgium)IV-10
10.Beaulieu of America LLC (USA)IV-11
Beaulieu Wielsbeke NV (Belgium)IV-11
Beaulieu Canada (Canada)IV-12
11.Bergoss BV (The Netherlands)IV-13
12.Berry Tapis (France)IV-13
13.Betap Tufting Steenwijk BV (The Netherlands)IV-14
14.Béw�ETapijt BV (The Netherlands)IV-14
15.Biokarpet SA (Greece)IV-15
16.Bonar Floors NV (The Netherlands)IV-15
17.Brintons Pty., Ltd. (Australia)IV-16
Brintons Carpets Ltd. (UK)IV-17
18.Brockway Carpets (UK)IV-19
19.Bruton's Carpet (USA)IV-20
20.Carpet Maker (Thailand) Co., Ltd (Thailand)IV-21
21.Carpets of Kidderminster (UK)IV-21
22.Carpets of Worth Ltd. (UK)IV-22
23.Carter Custom Carpets, Inc. (USA)IV-22
24.Cavalier Bremworth Ltd. (New Zealand)IV-23
25.Cavalier Carpets Ltd. (UK)IV-25
26.Costikyan Carpets (USA)IV-26
27.Covoare-Ungheni SA (Moldova)IV-27
28.Dansk Wilton A/S (Denmark)IV-27
29.David Almond Ltd. (UK)IV-28
30.Debilux NV (Belgium)IV-28
31.Devos-Caby NV (Belgium)IV-29
32.Dilana Rugs Ltd. (New Zealand)IV-29
33.Domo Group (Belgium)IV-30
34.Dura Tufting GmbH (Germany)IV-33
35.Durable Corporation (USA)IV-34
36.Feltex Carpets Australia Pty., Ltd. (Australia)IV-37
37.Formec Rena Mattor AB (Sweden)IV-37
38.Gabel SpA (Italy)IV-38
39.Gaskell PLC (UK)IV-39
Tomkinsons Carpet Ltd. (UK)IV-40
40.Greenwood & Coope Ltd (Cormar Carpets) (UK)IV-41
41.Gulvex AS (Norway)IV-41
42.Halbmond Teppichwerke GmbH (Germany)IV-41
43.Hammer Tæpper A/S (Denmark)IV-42
44.Headlam Group PLC (UK)IV-42
45.Hugh Mackay Carpets Ltd. (UK)IV-43
46.Industrias Saionara SA (Chile)IV-44
47.Interface, Inc. (USA)IV-45
Table 44: Half Yearly Sales Analysis: 2004-2005 (H1)(In US$ thousand)IV-48
Table 45: Annual Sales Analysis: 2002-2004(In US$ thousand)IV-48
Table 46: Annual Sales Analysis by Segment:2003-2004 (In US$ thousand)IV-48
Table 47: Quarterly Sales Analysis: 2003-2004(In US$ thousand)IV-48
Interface Europe Ltd. (UK)IV-51
48.Interfloor Tapijt BV (Netherlands)IV-53
49.Interstop AB (Sweden)IV-54
50.J & J Industries (USA)IV-54
51.Kasthall Mattor Och Golv AB (Sweden)IV-55
52.Kleen-Tex Industries Ltd. (UK)IV-56
53.Kraus Carpet Mills Limited (Canada)IV-58
54.Landry & Arcari (USA)IV-59
55.Lano NV (Belgium)IV-62
56.Mattel Carpet & Rug, Inc. (USA)IV-62
57.Meadow Carpets (UK)IV-63
58.Meusch-Wohnen-Bad Und Freizeit GmbH (Germany)IV-63
59.MIRA-X Internationaler Textilverlag GmbH (Germany)IV-63
60.Misr American Carpet Mill (MAC) (Egypt)IV-64
61.Misslon Carpet Corporation (Korea)IV-65
62.Mohawk Industries, Inc. (USA)IV-66
Table 48: Half Yearly Sales Analysis: 2004-2005 (H1)(In US$ thousand)IV-67
Table 49: Annual Sales Analysis: 2002-2004(In US$ thousand)IV-67
Table 50: Quarterly Sales Analysis: 2003-2004(In US$ thousand)IV-67
63.Monterey Carpets, Inc. (USA)IV-69
64.Multy Industries, Inc. (Canada)IV-70
65.Natco Products Corporation (USA)IV-71

[Toddy]

D Pick

Feltex could buy their own carpet and carpet their factory's, the head office and the tea lady's work area.

Guaranteed sales and will make the sales figure look impressive for the 104 buyers you have lined up.

They could keep the internal carpet sales a secret until the NBR or the tea lady blows their cover. Hopefully by then Feltex would have been sold and the directors will be in the hills.

[DCski13]

quote:Originally posted by belgarion

We talked about FTX, and supprisingly, all the dudes reckoned that FTX is well worth a punt. Not quite as good as the tea lady, (she's likely to be better informed), but 7 big beefy carpet layers probably know stuff ... ;)


I've heard similar noises from long-termers in property and related industries. One of them does own a carpet business. There is a degree of loyalty and, at last count, they're not intending on selling. At the risk on stating the obvious, to get by in property, ya need mates for support. This probably translates into supporting suppliers in difficult times and why? Cause they supported us when the going got tough.

[lanenz]

They still need to significantly reduce their debt first.

[sniper]

Belg, you can trust FTX's directors to always do the right thing by shareholders. Always. ;)

And if you want a rights issue at 1 to 1 at 50 cents, why not buy more shares now? Heck, you can get all the extra shares you want at 23 cents. As many as you like.

[kura]

Struggling carpet maker Feltex may have incorrectly accounted for a loan in its half-year report, according to an accounting expert.


At issue is a $27.4 million term advance from the ANZ which was listed in Feltex's full-year to June 2005 accounts as repayable on July 1, 2006. However, in the company's December half-year accounts the term advance does not appear under current liabilities – debts which must be paid within 12 months. Instead the term advance is lumped in with non-current liabilities.

Feltex spokesman John Walsh said the reason the term advance was not listed as a current liability in the half-year accounts was because the company had a "reasonable expectation" when it prepared the accounts that the facility would be extended.

But Canterbury University senior lecturer of accountancy Alan Robb said the term advance should have been shown as a current liability in the December accounts. "A balance sheet is prepared to show the financial position at a certain date, not what things might be in the future," he said.

Late last month Feltex disclosed that it was in breach of certain banking covenants and that all banking facilities – including the term advance – were being extended by the ANZ till the end of September.

Macquarie Equities investment director Arthur Lim said there was a convention in accounting that accounts should be conservative rather than aggressive. "The fact is we now know that Feltex has extended (the term advance) to September," he said. "Therefore the accounting convention of being conservative and what has transpired would say that (the term advance) should have been in current liabilities."

If the term advance had been included in current liabilities it would have certainly impacted analysts' perceptions of the company and highlighted a greater vulnerability in the balance sheet, Mr Lim said.
...............................................
That last sentence from Mr Lim is the most telling, what was that Sinper said about honesty ?

[Toddy]

Kura

Right, so the directors and auditors pulled the wool over the shareholders eyes once again with some creative accounting.
End result - no effect on the overall position of the busines.

However, you left the real world part of the article out of your post which does effect the bottom line. Large discounts offered to shift stock.

'Meanwhile, Feltex is offering heavy discounts on some of its carpets. According to a Feltex flier sent to selected carpet retailers in the first week of July – a copy of which was obtained by BusinessDay – Feltex is offering carpet from its commercial range at discounts of between a third and a half of the normal price. The flier says that the discounted prices are valid for orders invoiced between July 4 and 29. It also says that the pricing on offer is confidential and must be kept secure from general trade knowledge.'

[DCski13]

This is real dumb of management and directors not to manage the discounting appropriately. I was thinking that the directors/management know what they're doing, now I don't believe they know what's what. A personal phone call from Sales and Marketing to the owners of each outlet would have been more effective. I would imagine CAV will be telling retailers not to trust FTX, that product quality will have dropped and will be meeting the discounts. Why do you think the "7 big beefy carpet layers probably know stuff" are laying CAV and not FTX!!! Any twit can manage a business in good times.

Hey, belgrion! Do you want my 24k FTX. All yours at 24c ea.

[Steve]

quote:Originally posted by Toddy

Kura

Right, so the directors and auditors pulled the wool over the shareholders eyes once again with some creative accounting.


Interim accounts are not required to be audited, so it won't be the auditors pulling the wool in this instance...

[D_Pick]

Today's article on Stuff doesn't provide much new info except that the commercial sales team have a sale on. If anything it seems to be going over old ground in the FTX saga.

The market depth and trades today tell a different story (somewhat more positive), good buy/bid demand at 23 cents (435k shares) and relatively little sell/asks on offer at 25 cents (134k shares). Which may mean 25 cents a share is achievable today.

Volume weighted average price today 24 cents/share for 1.2m traded

Maybe today's Stuff article should have read "there is a sale on FTX shares at the moment 30-50% off"

[DCski13]

Sniper. Even been under tremenous pressure and not made mistakes? FTX's washing is on the line like nobody elses. What do you expect? But further, I am not acquianted with what caused FTX to drop dramatically from 1.70 Since I don't know, at ths stage, however, I'll rest on the 'under tremenous pressure effect' like so many other businessman do - whoops, and women.

[Snow Leopard]

quote:Originally posted by DCski13

...But further, I am not acquianted with what caused FTX to drop dramatically from 1.70 Since I don't know, at ths stage, however, I'll rest on the 'under tremenous pressure effect'...

You invested in a company without knowing the reasons for the [recent]collapse in SP? [:0]

[DCski13]

But more so... the academics are now having a go at FTX

[DCski13]

quote:Originally posted by Paper Tiger


quote:Originally posted by DCski13

...But further, I am not acquianted with what caused FTX to drop dramatically from 1.70 Since I don't know, at ths stage, however, I'll rest on the 'under tremenous pressure effect'...

You invested in a company without knowing the reasons for the [recent]collapse in SP? [:0]


YES :D

[trackers]

quote:
You invested in a company without knowing the reasons for the [recent]collapse in SP? [:0]


quote:
YES :D


Interesting....Good luck with that DCski!

[sniper]

quote:Originally posted by belgarion


quote:Originally posted by DCski13

But more so... the academics are now having a go at FTX


You mean that reporters (generally with undisclosed interests) are seeking out comment from anyone to trash the share as hard as they can?


But that should suit you just fine. Cheaper buying, no? ;)

[DCski13]

quote:Originally posted by belgarion


quote:Originally posted by DCski13

But more so... the academics are now having a go at FTX


You mean that reporters (generally with undisclosed interests) are seeking out comment from anyone to trash the share as hard as they can?


What sells newspapers, among other things? Answer - reporting heroes and villains. So what is FTX in the journos view (dictated by the Editor demanding sales)? The Villain.[}:)]

[lanenz]

My average SP is 25 as well. I bought at 30, 25 and 20. Only prob is i spent 50k at 30, 2k at 25 and 20.

Sorry for the warped sense of humor.

disc. never held any

[sniper]

quote:Originally posted by DCski13
What sells newspapers, among other things? Answer - reporting heroes and villains. So what is FTX in the journos view (dictated by the Editor demanding sales)? The Villain.[}:)]


That's right - the media must stop reporting on :

- FTX breaching banking covenants.
- Directors hiding behind PR firms (paid for by shareholders)and issuing sanitised statements.
- Potential investors doing due diligence and then, walking away.
- FTX needing new equity to survive.
- FTX dressing up its balance sheet to hide problems.

Then everyone will be very happy.

The media is also to be blamed for FTX rejecting Godfrey Hirst 60 cents per share offer in February this year.

Everyone must only believe the statements issued by FTX directors and management.

Because only they are the custodians of truth and morality. They always act in the best interest of all shareholders. They are very respectful of their responsibilities to keep the market informed in a timely manner and without flinching from telling the truth, the whole truth and nothing but the truth.

Only the FTX directors can make FTX 'flourish' again.

[Pennywise]

quote:Originally posted by Phaedrus

Belg, FTX has been in a downtrend for a year. It is still in a downtrend - making lower highs and lower lows (just)
On Balance Volume is essentially flat and there is no hint that any accumulation is occurring.
Do you really think that this stock is about to take off?
Do you think it has stopped falling?
It's only 2 days since you were agreeing with Footsie that "a sub 30c share price is still on the cards"
I don't think those are speculative $$$ you are holding - I think they are gambling dollars!
http://img.villagephotos.com/p/2006-2/1151662/FTX224001.gif



Worth noting from FEB

[winner69]

Sniper .... remember the statement from FTX last year ..... "... the market share of imports in Australasia has risen from 14.5% to 17% for the 12 months to 31 March 2005."

A change in the market 'unforeseen' in the market (yeah right)

Feltex management were rather perceptive when they said that the consequencee of this was " .... putting pressure on the
company's ability to maintain and improve average selling prices and margins."

Sam couldn't run a carpet company like Feltex but he did wonders with Shaws before Feltex took them over .... but he is a carpet man and a great trader and deal maker (as in selling stuff)

The threat of these Chinese manufacturers is real .... hell if imports took 2.5% increased share a year ago without trying ... and bought Feltex to its knees what will a concerted effort do

[winner69]

In The Herald this morning .... Saunders reckons the company may find an investor, saying yesterday: "Interest is being expressed by more than one party."

Does this meam that Belg rang him the other day saying he was interested?


http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10391411

[morpork]

quote:Originally posted by winner69

In The Herald this morning .... Saunders reckons the company may find an investor, saying yesterday: "Interest is being expressed by more than one party."

Does this meam that Belg rang him the other day saying he was interested?


http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10391411





No,its my fault
I got in touch with a Guernsey based financier who happened to make his fortune out of carpet,but in my opinion don't hold your tickets,this ones dog tucker.

But then again I could be ramping

[morpork]

Typical Herald reporting

Helen opened her big gob when the shares were at 28c

They then rapidly rose to 68c

It was a gaurenteed winner for a time

[D_Pick]

As noted earlier there has been good buy side demand recently

http://www.stuff.co.nz/stuff/0,2106,3733791a13,00.html

judging by the relatively low trading volumes since the NBR article one could also assume that existing holders aren't in any rush to sell

retailers wanting to support FTX because they are a different company these days.....

its all starting to add up to a potential turnaround story ideally with a corresponding profit for new investors

the missing ingredient is new equity

[warthog]

The warthog is not saying that nothing will come of FTX, but why would anybody invest in a company where there is not a solid and transparent track record of management keeping the market well enough informed about the business to make sound investment decisions?

This doesn't mean management talking it up, it means not being misleading, being prudent with forecasting, etc.

The warthog is picking that a party with industry knowledge - and/or a thick skin - will buy into FTX on-market before it goes into receivership or, with the blessing of management (no other options but down) will invest off-market under such terms that existing shareholders will be left with bobbins.

[seagull]

It appears a turnaround is happening and the company is trading profitably. IMHO Feltex should survive with either a renouncible rights issue or a cornerstone investor. The quiet accumulation suggests the market is becoming more positive.

[warthog]

quote:Originally posted by Seagull

It appears a turnaround is happening and the company is trading profitably. IMHO Feltex should survive with either a renouncible rights issue or a cornerstone investor. The quiet accumulation suggests the market is becoming more positive.


Have you picked up any FTX Seagull?

The warthog is interested to know whether your confidence is matched by action, but won't be offended if you choose not to disclose. ;)

[seagull]

Yes Warthog I always put my money where my mouth is Cheers.

[winner69]

quote:Originally posted by Seagull

It appears a turnaround is happening and the company is trading profitably. IMHO Feltex should survive with either a renouncible rights issue or a cornerstone investor. The quiet accumulation suggests the market is becoming more positive.


Feltex tarding profitably at the moment .... probably not .... but as they say probably cash flow +ve .... but that can mean a lot of things

Remember that H1 2005 earnings announcement reported 'a strong EBITDA increase' ... but forgot to mention that operating cash flow was negative (that was the first real sign form company disclosures that things were not as bright as they were making out and even then they raised the dividend)

Back then they were making far more carpet than they more selling (forecasting logic in the computer program a bit awry I'm told) .... currently production is down and they are selling all that excess stuff cheap and not spending anything on capex etc ..... easy to be cash flow +ve on that basis.

Yes a turnaround story could be on the horizon .... but like most things in life something dramatic has to change before trends/status quo changes .... and that dramatic something, whatever it is, has not happened YET.

[DCski13]

Hey - got a GREAT idea. When it's all done and dusted and we've either lost the lot or made a fortune come end Sept., why not a knees up at the Crazy Horse Stake House on Willis Street!! (the foods ok - they do carpetbag steaks, I kid you not! - and the place crawles with women, and in a fit of madness you could all nominate me for the board!!). If keen, I'll post it on FSO.

[warthog]

quote:Originally posted by Seagull

Yes Warthog I always put my money where my mouth is Cheers.


Good on you Seagull - nice to see somebody walking their talk. ;)

What with a new approach to retailing in Australia I hope that something positive happens for you.

The warthog still wouldn't touch it with a bargepole though.

[lanenz]

I reckon the mum and dad investors are ripe for the picking over the next couple of months. along comes a saviour...but at a price.

[DCski13]

Sniper - points noted (as you previously said to me).

Further - your average CEO is a psychopath and from what little I've been reading on this site about Magill, he looks like fitting the bill.

So are the Chinese going to manufacture carpet out of swine fresh or similar product in the very near future (am I allowed to write this on Sharetrade or will I be censored).

So why did the tartan boys get taken in and back the IPO.

I have a sign above my desk - a quote from a dieing friend of mine from 2005 which I hadn't heard since 1978 - Bull**** baffles brains.

[sniper]

quote:Originally posted by Seagull

It appears a turnaround is happening and the company is trading profitably. IMHO Feltex should survive with either a renouncible rights issue or a cornerstone investor. The quiet accumulation suggests the market is becoming more positive.


Excerpts from Report to Shareholders 27 July 2005 - a year ago :

"Initial decisions on the review of manufacturing operations will be implemented this year and deliver savings in this financial year."

"The company is operating profitably under these conditions, but at a level that is unsatisfactory to the Board. The review of operations will generate savings that will improve profitability for the 2006 year."

"A full analysis of the 2005 year will be provided with the audited annual results to be released on 24 August. The company is trading profitability and a range of measures that will positively impact on current profitability is being implemented."

A year on and the company has not only not delivered - it has instead delivered long-suffering Mum and Dad shareholders to the abyss?

Why do I get a sense of deja vu when I compare the statements from Feltex with that from RMG?

[Snow Leopard]

quote:Originally posted by sniper

Why oh why do I get a sense of deja vu when I compare the statements from Feltex with that from RMG?

Because you have seen it all before?

[winner69]

RMG announcement late Feb 2005 had these comments ..."result is consistent with previous advice to the market" AND “as previously advised to shareholders this result is unacceptable" BUT "it should not be viewed in
isolation as significant progress is being made in the turnaround of RMG Limited" BECAUSE "We have made considerably progress" (with a list of initiatives including sacking a few staff) AND "Additionally we have initiated an extensive review of all costs and expect savings to be realised by fourth quarter.”

Two months later RMG were in voluntary administration

Sniper ... wonder if they use the same PR firm?

[D_Pick]

Sniper is this article/view relevant today and moving forward?

The IPO book building process with institutions is history....

..and on 24th August 2005 Mr Sam Magill stepped down as Chief Executive Officer

The "Institutional knowledge" article highlighted implies that Sam Magill was a big part of the problem for FTX both internally and externally.

I say good luck dealing with Safari Sam, Liyang Kaili Carpet Material :)

[sniper]

quote:Originally posted by D_Pick

Sniper is this article/view relevant today and moving forward?

The IPO book building process with institutions is history....




D_Pick,

It is even more relevant today because it is about the judgement and integrity of the Board in leading Feltex.

The article is about Mr Saunders (on behalf of the Board) admitting that Sam Magill was strategically unsound (from day one !!!!) and they knew he was strategically unsound. If they knew that, why was nothing done until Feltex blew up? There was nothing but glowing comments from the Board on Sam (especially during the IPO) - then, he is to be blamed for everything.

Take one : Mr Saunders on Sam Magill (6 May 2004) - “Our senior executives are among the most experienced in the Australasian carpet industry and have the experience and market knowledge required to continue to grow the Feltex business."

Take two : Same Saunders on Sam Magill (27 July 2005)- “I don’t think his strong point was longer-term strategic analysis and we knew that and he knew that. And we were discussing that more and more as being an issue, trying to ensure that we were getting this analysis better addressed. We knew it had to be addressed.”

Now we have the same Mr Saunders telling us that Mr Thomas is the right man to head Feltex and the new CEO (from Dec 2005) has the right experience to take Feltex to the future.

How do we know that Mr Thomas is a sound and capable CEO? Because the Board says so? Can we trust this Board to do anything right?

[D_Pick]

Fair play sniper, Mr Saunders and some other longer serving board members haven't been held accountable for their leadership results yet.

This opportunity to raise equity on favourable terms is a chance for some board redemption.

Today's article below has more relevance IMO

http://www.stuff.co.nz/stuff/0,2106,3734919a13,00.html

It would be a difficult time for anyone to operate with a tropical fever let alone the CEO of FTX (a company with challenges ;)). I guess it has kept him warm over the June cold snap though

[duncan macgregor]

quote:Originally posted by Lawso

For what it's worth, Forsyth Barr are very positive about FTX in today's Sunday Herald. " . . . a number of attracive investment fundamentals . . . strong brands . . . full year '05 yield of 10.3%" FB reckon FTX is trading at a 25% discount to their valuation of $2.10 and recommend "Buy".
Remember though that this is the crowd that for years had FBU as a Sell.

To think that some people actually pay for advice. It makes interesting reading, starting at the first page in this thread. You can see where people start by being so optimistic, then slowly turning into the scorned lover seeking revenge. I think a lot of you should learn to do your home work with an open mind. Saved or not, this company wont make investors a decent return. macdunk

[D_Pick]

Thanks for that free advice macdunk.

Yes several posters have turned sour on this sick puppy.

Lawso's comments you have quoted were posted a while ago (late November 2004) so that's very useful for a technical analyst looking at history... but not so useful looking forward from today

Can you confirm why FTX will categorically not make a decent return going forward if a new capital structure can be arranged? If all carpet manufacturers in Australasia (or globally) cannot make a decent return for their shareholders then why are any still in business today?

Also leverage tends to exaggerate both positives and negatives. At this share price I think there is ample room for upside if any positives occur (new capital structure, further NZD/AUD weakness which will flow through to bottom line, new cornerstone investor announced etc)

[sniper]

D_Pick, take the time to read the thread on RMG and you will read that there ae plenty of similarities between RMG and Feltex. You could say there were also a number of posters turning sour on RMG - they were simply highlighting the PR bull that was coming out of RMG. Anyone who bothered to read and follow avoided RMG and did not lose money.

To answer your questions :

1. Not all carpet manufacturers are in trouble like Feltex - Cavalier is an excellent example of a good carpet manufacturer who know what it is doing and so is making good returns on its capital. Just like there are good car companies (Toyota, BMW and Audi) as there are bad car companies (GM and MG) - you cannot generalise that because one is bad, all must be bad.

2. Can you categorically confirm that Feltex can make a decent return if a new capital structure is put in place? A new capital structure can be put in place to make Feltex profitable - BUT at what price to existing shareholders? And would anyone sane entrust their capital with Tim Saunders and his team at the helm?

Whichever you cut it, Feltex is going BROKE as it cannot repay ANZ its debts as they are due. It is unable to attract new capital so far (after exposing itself to any number of potential investors)and it has not been able to get underwriters for a capital raising from existing shareholders.

ANZ will give FTX until September to raise the new capital. Afyer that, it will consider options for getting its $129m (was $80m 2 years ago) back. A receivership is the most effective way of doing it - as is the case with RMG.

So just keep hoping the white knight will appear ... just remeber white knights only rescue beautiful damsels in distress.

FTX is neither beautiful nor attractive. Why do we know that? Because potential white knights like Talley's have looked and said "you must be joking!" (Just like the IPO forecasts).

[winner69]

Some 75% of Feltex sales are in Australia ... and as they keep reminding us tied to a large extent on the housing market

So this is not so good news for Peter on his sick bed

Interest rates push building industry down, economists say

Wednesday July 19, 2006, 10:19 am

There have been further gloomy forecasts for the housing construction sector in Australia.

Economists at the ANZ Bank believe a recovery in residential building will now be delayed until the end of next year.

The bank's head of Australian economics, Tony Pearson, has blamed upward movements in interest rates.

"With the impact of the May rate rise not yet put through the system, and with another one now pencilled in for August, we think that'll lead to some further downward momentum in dwelling investment," he said.

"But it does start to come good from the end of 2007."

[Jess9]

When it hits 5.3c, I may swap out/over from a few HGD's (at 1 for 1 as of today). Is this coy a miner too?? I only ask as it appears to be a big hole requiring lots of capital ; )

[MSL]

quote:Originally posted by DCski13

Further - your average CEO is a psychopathand from what little I've been reading on this site about Magill, he looks like fitting the bill.

I'm so pleased to escape the mean but I "own" a cat that is positively antisocial at 5.00am each morning...[:p]...:D

[D_Pick]

sniper, I'm not feeling the link yet with RMG? I can't see any relevance to FTX today or going forward

just finished reading the thread "RMG that old chestnut" which was kindly highlighted to me

Only similarities I can see at this stage is that both companies share prices dropped at pace looking at the history charts and both had/have too much debt

In summary

RMG revenues averaged 38m per year (2001 through 04) which is relatively small
RMG didn't report any accounting profits (Jun 2001 through to Jun 04) they were all losses
RMG was formerly an oil explorer Frontier Petroleum and only appeared in its current guise in Jun 2000 as 16 businesses combined, so as a company RMG was very young and therefore speculative in nature
RMG was heavily dependent on technology and in particular its mission critical IT systems/databases
RMG database(s) hard to value due to the intangible nature of its software and data content
RMG businesses not so cyclical, services in demand both in postive and negative economic times
RMG had 755m shares on issue which is relatively high for such a small company
Did RMG ever have a high market share? or a long established trading history?

On the other hand

FTX has revenues around 300m today relatively high compared with RMG
FTX has reported accounting profits (Jun 03, 04, 05), I'm expecting a loss for Jun 06 due to major restructuring costs/redundancies
FTX is a manufacturing company making a mature product "carpet" which does have a technology component in the machinery software but is nowhere near as sensitive to change as a pure service company operating a database like RMG
FTX has a wide distribution platform through its carpet retailers and therefore revenues aren't concentrated with single customers
FTX has 65 plus years of trading history and weathered many building cycles
FTX has high market share within the Australasian carpet industry
FTX has 149m shares about 20% of RMG total shares on issue
FTX is in a cyclical industry which has already entered a downturn

[D_Pick]

MSL the Feltex charity could do with a 100.... million about now ;)

whiskers cat food works in the TV commercials

[D_Pick]

There could be a strong case for insider trading if Directors or Management purchased/sold shares at the moment, especially if a deal eventuated in the short term.

Tim Saunders hasn't sold any of his 500,000 shares yet, purchased for $850k at the IPO. He did buy another 50k earlier this year 28th Feb for 48.5c per share. Good to see he has skin in the game.

[sniper]

quote:Originally posted by D_Pick

There could be a strong case for insider trading if Directors or Management purchased/sold shares at the moment, especially if a deal eventuated in the short term.

Tim Saunders hasn't sold any of his 500,000 shares yet, purchased for $850k at the IPO. He did buy another 50k earlier this year 28th Feb for 48.5c per share. Good to see he has skin in the game.


You mean like Michael Stiassny having skin in the game in RMG? Like 2.2m RMG shares?

Nice similarity, huh?

[lanenz]

Your not saying that Feltex is deceiving the shareholders do you. That is a criminal activity. Surely we have to believe these guys that they wouldnt tell us lollies.

disl. last time i trusted someone i got duped.

[sniper]

Lanenz, I think this article answers your question.

"Feltex said it was working closely with its bank and was evaluating initiatives to raise new equity. But on Friday, in response to an NBR article, Feltex confirmed it was in breech of certain banking covenants and said a successful capital raising was now fundamental to the future of the company. NBR has since learned that a financial institution was briefed about talks with a potential new cornerstone shareholder more than two weeks ago. “Telling an institution but not telling shareholders has got to be clear evidence that they have messed up big time I would have thought,” Mr Sheppard said.
“The statements they [Feltex] have made would appear to arguably be deceptive, if not, at least misleading.”

http://www.nbr.co.nz/home/column_article.asp?id=15531&cid=4&cname=

Also, when companies use a PR firm (paid for shareholders) to communicate with investors, shareholders and the media, it is a very very Bad Sign. Very Bad. It means they have something to hide.

With Feltex, we know that they have not been upfront and direct with shareholders.

[winner69]

Sniper ... what you expect from an Aussie run company

Has some sales and factories in NZ but the action is all in Melbourne ... when Peter is at work that is

Bloody nuisance all those NZ shareholders ....

[beacon]

hear hear

[winner69]

Shoeshine in the NBR today says the FTX shareprice is defying all the laws of physics by refusing to go under 22 cents

He can't fathom the rationale of the 'investors' who have put this floor under the share price

Maybe Belg could enlighten us .... he is one of those Shoeshine can't understand .... as he is builds up his 4.99% shareholding

[Toddy]

Winner

The NBR hit the press before they could look at todays SP.

Down 10% already today.

[winner69]

Agree Mr Pick that Feltex have some real attributes ... good brand / market presence / real sales etc

What they don't currently have is a business model that is capable of delivering ongoing sustainable profits .... in good and bad times .... you only need to look at their performance over the 5/6 years (and probably prior) to come to that conclusion ... even with acquisitions / restructures / retrenchments etc EBITDA results have been very patchy

In good times when things are going their way they make (just) acceptable returns ... when things go against them (marketwise) than the **** hits the fan

The current high debt levels is a real problem and the cause for their current problems .... but essentially it is a distraction ..... even if recapitalised Feltex will continue to disappoint under the current business model, strategies and top management.

Feltex does need to start afresh ... with new owners, new management and a new strategic focus to turn this dog around. Things don't change by tinkering around the edges ..... radical changes need to be made.

Look at recent turnarounds. Orica (ORI) is a good one ..... sack all the odd managers and bring in a true leader and shake the place up .... ie start afresh ..... and the share price goes from $4 to more than $20 in 4 years.

Until somebody does that to Feltex there is no hope (if there is any at all). Little point in 'investing' in FTX now .... plenty of time to get on board when one knows that things will change.

Even then it is going to be a tough road. FTX is a one product company and a high cost manufacturer facing global competition in current difficult market conditions.

Still on the sidelines waiting to see what unfolds

[Pennywise]

quote:Originally posted by belgarion

Doom and gloom ... Keep it coming ;)

discl: hold and will be buying more when it slumps back to 33. (Why? My spreadsheet says so ;))



By the end of the year, I predict Belgarion will miraculously make a profit;)

60c, 55c 40c 33c, 32c ..........22c 19c...

Go Jeremy:D

[evedder]

Totaly agree with winner69'ers last comments - why buy now? The financials are going to be ugly for a while longer.... current management is not going to change much.... why not invest (and make money)elsewhere until the outlook is clearer and FTX get some better numbers on the board.

[lambton]

quote:Originally posted by evedder

Totaly agree with winner69'ers last comments - why buy now? The financials are going to be ugly for a while longer.... current management is not going to change much.... why not invest (and make money)elsewhere until the outlook is clearer and FTX get some better numbers on the board.


15 cents 15 cents 15 cents and even then you'll have to stump up a hell of a lot of money to ave in to the rights issue.

[clearasmud]

My feelings are that the problem with feltex is it is difficult to see a company value greater than the net debt ($130m) and that assuming the co can maintain healthy margins.
Company may therefore be too far gone.

[sniper]

Yes, Belg - just like with the ole chestnut, RMG.

Buy ...buy ...bye bye. ;)

[sniper]

EBITDA = $21m.

Take out depreciation (a real cost - re Buffett) of $6m = EBIT $15m.
Take interest cost (9% on $129m) of $11m = NPBT $4m.
Take out SIPs subsidy of $5m = operating loss of $1m.

Meanwhile, ANZ Bank has had to shell out another $49m loans (60% increase) since IPO to bail out and keep Feltex going whilst the Board try and con;)vince some investor to put in equity to bail out ANZ!

The picture becomes clear! [^]

[lambton]

quote:Originally posted by sniper


EBITDA = $21m.

Take out depreciation (a real cost - re Buffett) of $6m = EBIT $15m.
Take interest cost (9% on $129m) of $11m = NPBT $4m.
Take out SIPs subsidy of $5m = operating loss of $1m.

Meanwhile, ANZ Bank has had to shell out another $49m loans (60% increase) since IPO to bail out and keep Feltex going whilst the Board try and con;)vince some investor to put in equity to bail out ANZ!

The picture becomes clear! [^]







And all the while NZX lets em stay listed.

[winner69]

A recent survey about what makes a company 'well respected' said that the most desirsble qualities needed in a successful company were

- a clear strategy and execution that provided high returns for shareholders

- a focus on the long term, esp having strategies to counter all competitive and market forces that could negatively impact on the health of the business

- a board and management preprared to communicate with shareholders

And companies with those attributes generally produced well above average shareholder returns .... but the driver of success came back to how good the CEO was.

Feltex is on its knees .... down and out .... unless it starts again with fresh leadership who have the above noted qualities there is no hope.

Sorry Belg .... why 'invest' now .... wait until you know there is some hope for Feltex.

[winner69]

Belg is famous ...Inder quotes him in the NZ HGerald yesterday .... and I think Inder is a bit upset with belg

Quote
The most extreme version frequently appears in the less informed submissions to internet share-trading chat rooms - a forum often, and pejoratively, described as the talkback radio of the sharemarket.

One investor - belgarion - this week noted a report documenting an academic's low opinion of Feltex's book-keeping practices.

Dismissing another's view, belgarion said: "You mean that reporters (generally with undisclosed interests) are seeking out comment from anyone to trash the [Feltex] share (sic) as hard as they can?"

If these views were expressed only in forums such as this they could be dismissed. But, sadly, this is not the case, they go right up the line.

[jonny5]

link?

[winner69]

quote:Originally posted by jonny5

link?


Its 'premium' stuff on the web

[warthog]

quote:Originally posted by winner69

Belg is famous ...Inder quotes him in the NZ HGerald yesterday .... and I think Inder is a bit upset with belg

Quote
The most extreme version frequently appears in the less informed submissions to internet share-trading chat rooms - a forum often, and pejoratively, described as the talkback radio of the sharemarket.

One investor - belgarion - this week noted a report documenting an academic's low opinion of Feltex's book-keeping practices.

Dismissing another's view, belgarion said: "You mean that reporters (generally with undisclosed interests) are seeking out comment from anyone to trash the [Feltex] share (sic) as hard as they can?"

If these views were expressed only in forums such as this they could be dismissed. But, sadly, this is not the case, they go right up the line.



We all know journalists seeking in new ideas or perspectives trawl the net frantically the night before their deadlines - they seem to listen to the "talkback radio of the sharemarket" as much as anybody else here, possibly more.

[winner69]

quote:Originally posted by warthog

We all know journalists seeking in new ideas or perspectives trawl the net frantically the night before their deadlines - they seem to listen to the "talkback radio of the sharemarket" as much as anybody else here, possibly more.


...ever wondered whether some actually participate in this 'talkback radio of the sharemarket' ??????????

[sniper]

quote:Originally posted by winner69


quote:Originally posted by jonny5

link?


Its 'premium' stuff on the web




Role of media is often misunderstood

Saturday July 22, 2006

Business journalists are corrupt.

One day we buy shares in a company and the next day we wax lyrical about its chief executive and his remarkable achievements.

We believe business is inherently bad or amoral and run campaigns that prove our misguided conspiracy theories. We dismiss as lies or half-truths any reasonable answer implying the contrary.

We are lazy. We are presented with press releases, which we then transcribe and then add a "byline" committing a fraud by implying we actually added value.

Our stories are half-baked, largely representing the views of the special interest group that got to us first. And we while away our afternoons and evenings in pubs, bars and restaurants supping with people we despise because it is the only way we know how to make a buck. It is a grossly unfair characterisation of our profession, yet unfortunately it is one that has currency.

The most extreme version frequently appears in the less informed submissions to internet share-trading chat rooms - a forum often, and pejoratively, described as the talkback radio of the sharemarket.

One investor - belgarion - this week noted a report documenting an academic's low opinion of Feltex's book-keeping practices.

Dismissing another's view, belgarion said: "You mean that reporters (generally with undisclosed interests) are seeking out comment from anyone to trash the [Feltex] share (sic) as hard as they can?"

If these views were expressed only in forums such as this they could be dismissed. But, sadly, this is not the case, they go right up the line.

NZX chief Mark Weldon, for instance, has frequently berated the New Zealand Herald and other media organisations for harbouring conspiracy theories. Meanwhile, the embattled Telecom chief executive Theresa Gattung has employed a similar term as she criticised coverage of her company's reluctance to open up its network to rivals.

Other executives attack us for "seeing the glass half-empty rather than half-full" because we ask about how the building products company will handle the economic slow-down rather than how it achieved a strong result. These attitudes are founded on a misunderstanding of the role of the media and how it operates. Worse still, they evidence a degree of discomfort with the media properly exercising its duties.

Did the NZX breach - at least the spirit of - its continuous disclosure regime when it decided in June not to notify its shareholders of its u-turn on planned fee increases?

Was Telecom playing its same old game this week as it told rivals that it had no room in its telephone exchanges for equipment that would allow them to offer high-speed internet access at nearly the same cost?

Such questions obviously betray a line of thought. But a line of thought is often a long way away from a headline or a newspaper article. And far from feeling inconvenienced by such questions, executives should be relieved they are posed because, at the very least, it gives them an opportunity to correct misinformation or put their perspective.

Journalists deal daily in information almost without exception tainted by the spin of special interest. And although the information suffers, its sources often demand protection - which we must deliver if only to ensure the information flow.

On top of this, we daily face a barrage of half-truths and lies. In the face of such onslaught, it is perhaps no wonder tha

[sniper]

RMG, Belgarion.

Great contrarion play, huh? ;)

[winner69]

Saunders was quoted a few weeks ago 'as every week passes the better position Feltex finds itself in' .... whatever that means

another week has passed so that's possibly good news .... have Feltex staved off receivership for another week?

Or has Peter (using all his banking experience and connections) stitched up a deal to save Feltex .... but when you think about it his banking background / connections haven't been any use recently .... and now the naster banker is running a manufacturing company.

Must be another announcement soon coming out Melbourne HQ

[winner69]

quote:Originally posted by belgarion



.....It's a dirty, horrible, dog-eat-dog world ... And yes ... I am part of it. Feel free to benefit from my/others actions for the good of ourselves; ... and the 900 odd people that FTX employs. ;)

Call me "Gecko" if you like ... It may, in this instance, be missing the point ... At least I hope the FTX employees would agree ...


I wondered whay you meant when posted this a while ago .... and still do

Belg ... are you saying that your 4.99% ownership of Feltex will save the jobs of these 900 odd employees?

[jonny5]

4.99% are you for real?

[winner69]

quote:Originally posted by jonny5

4.99% are you for real?


Belg said that was his target

Mind you it doesn't take too much dosh to get that much .... at current prices just over a mill .... well within Belgs resources

[jonny5]

I suddenly feel oh so small :p

Gotta start somewhere though I suppose.

[D_Pick]

wonder what's up?

HALT: FTX: Feltex Carpets Limited (FTX)- Trading Halt of Securities 08:52am
FTX
24/07/2006
HALT

REL: 0852 HRS Feltex Carpets Limited

HALT: FTX: Feltex Carpets Limited (FTX)- Trading Halt of Securities

24 July 2006
NZX Regulation Announcement
Feltex Carpets Limited (FTX)
Trading Halt of Securities

NZX Regulation advises that at the request of Feltex Carpets Limited (FTX) a trading halt has been placed on FTX securities effective immediately pending resolution of negotiations for a restructuring of the Company. It is expected that this trading halt will continue for at least two Business Days

ENDS
End CA:00134340 For:FTX Type:HALT Time:2006-07-24:08:52:49

[D_Pick]

surely another party isn't going to invest in the carpet industry?

FTX couldn't possibly make a profit in the future given its current market share and size

[winner69]

Good prediction yesterday eh

Suppose I better get the cash ready .... just in case there is some good news and there is a future (ie a turn around) for Feltex

Wait and see what eventuates

[lambton]

quote:Originally posted by lambton


quote:Originally posted by sniper


EBITDA = $21m.

Take out depreciation (a real cost - re Buffett) of $6m = EBIT $15m.
Take interest cost (9% on $129m) of $11m = NPBT $4m.
Take out SIPs subsidy of $5m = operating loss of $1m.

Meanwhile, ANZ Bank has had to shell out another $49m loans (60% increase) since IPO to bail out and keep Feltex going whilst the Board try and con;)vince some investor to put in equity to bail out ANZ!

The picture becomes clear! [^]







And all the while NZX lets em stay listed.



In trading halt. Ha I was right. Pity NZX took so long to react. Small investor will be out of pocket yet again. [^]

[kittydashwood]

Maybe the FTX rights issue will be a good way for Belg to get cheap CAV shares[}:)]
If FTX can stay listed that is!

[winner69]

quote:Originally posted by D_Pick

surely another party isn't going to invest in the carpet industry?

FTX couldn't possibly make a profit in the future given its current market share and size


Quite right D_Pick ..... with the right strategy and the right team to execute it successfully ..... and a strong balance sheet there is hope for Feltex making some decent returns

But we have to what and see what this 'restructure' is before assessing what future value there is in it

[D_Pick]

quote:Originally posted by lambton

And all the while NZX lets em stay listed.

In trading halt. Ha I was right. Pity NZX took so long to react. Small investor will be out of pocket yet again. [^]



Remind me again what you were right about lambton?

FTX requested this trading halt, which implies new price sensitive information is pending.

In the announcement FTX stated that the halt is relating to the resolution of negotiations for a restructuring of the Company, which may well be positive news for existing and future shareholders.

NZX is just following orders (at FTX's request), have a re-read of the announcement ;)

[lambton]

quote:Originally posted by D_Pick


quote:Originally posted by lambton

And all the while NZX lets em stay listed.

In trading halt. Ha I was right. Pity NZX took so long to react. Small investor will be out of pocket yet again. [^]



Remind me again what you were right about lambton?



FTX requested this trading halt, which implies new price sensitive information is pending.

In the announcement FTX stated that the halt is relating to the resolution of negotiations for a restructuring of the Company, which may well be positive news for existing and future shareholders.

NZX is just following orders (at FTX's request), have a re-read of the announcement ;)



- or perhaps face saving. Like go on u do it before we do it [:p]. After all the coy is insolvent, isn't it?. And considering the poor disclosure up to now I'm not picking good news on the way - 15 cents dilution here we come.

[Gryffyn]

Trading Halt? And I thought the problem was that they weren't trading enough.

[sniper]

Read the announcement very carefully and just remember that with Feltex, what you read is usually not what it means.

Notice it doesn't say anything about capital restructuring? It also doesn't say anything about a potential investor?

HALT: FTX: Feltex Carpets Limited (FTX)- Trading Halt of Securities 08:52am
FTX
24/07/2006
HALT

REL: 0852 HRS Feltex Carpets Limited

HALT: FTX: Feltex Carpets Limited (FTX)- Trading Halt of Securities

24 July 2006
NZX Regulation Announcement
Feltex Carpets Limited (FTX)
Trading Halt of Securities

NZX Regulation advises that at the request of Feltex Carpets Limited (FTX) a trading halt has been placed on FTX securities effective immediately pending resolution of negotiations for a restructuring of the Company. It is expected that this trading halt will continue for at least two Business Days

ENDS
End CA:00134340 For:FTX Type:HALT Time:2006-07-24:08:52:49

[Gryffyn]

doesn't matter though does it if you can't act on what you read between the lines!

[The Doctor]

maybe a partial 'sell off' to reduce debt!

[D_Pick]

Two days to speculate what "restructuring of the company" really means

...one could also speculate that FTX isn't "pending a resolution of negotiations" with itself, so another party is likely to be involved

[lanenz]

Just imagine if Viking came to the rescue, wouldnt that be a hoot?

[sniper]

Restructuring talks = Feltex-speake for receivership talks with ANZ?

RMG all over again, guys.

[sniper]

quote:Originally posted by sniper

D_Pick, take the time to read the thread on RMG and you will read that there are plenty of similarities between RMG and Feltex.

Whichever you cut it, Feltex is going BROKE as it cannot repay ANZ its debts as they are due. It is unable to attract new capital so far (after exposing itself to any number of potential investors)and it has not been able to get underwriters for a capital raising from existing shareholders.

ANZ will give FTX until September to raise the new capital. Afyer that, it will consider options for getting its $129m (was $80m 2 years ago) back. A receivership is the most effective way of doing it - as is the case with RMG.



So is ANZ moving early to protect its position?

[D_Pick]

Last time I checked my calender we still had two months before the end of Sept.... doubt this is ANZ calling time


quote:

GENERAL: FTX: UPDATE - 3 JULY 2006 09:10am

Feltex's Bank has agreed to take no action in respect of the breach of certain covenants in the Bank Facility Agreement. All banking facilities continue, including those which had a term expiry date of 1 July 2006, until the end of September, while Feltex is pursuing equity raising and restructuring alternatives.

The Bank will be kept fully informed by Feltex of the strategic opportunities presented to the Company for capital raising and restructuring. The Bank will undertake interim monthly reviews and will formally review its position at the end of September.

Ends.

For further information, please contact:
John Walsh - 021 660 776
End CA:00133523 For:FTX Type:GENERAL Time:2006-07-03:09:10:14





sniper have you seen FTX announce receivership talks before?

[Base Trader]

If the likelihood is that no rescure package has arrived or all avenues are exhausted the ANZ would have kept the discretionary rights under this situation (probably defined in its new MAC) to place the company into receivership.

[winner69]

quote:Originally posted by D_Pick


The Bank will be kept fully informed by Feltex of the strategic opportunities presented to the Company for capital raising and restructuring. The Bank will undertake interim monthly reviews .....



Reviews held on the 20th of each month .... last Thursday with a weekend to think about it?

[sniper]

Belgarion - your 4.95% should be easily within reach on Wednesday.

In fact, it is likely you can have 100% of Feltex for 1 cent.

Pity about those you bought at 25 cents though ......:(

[sniper]

quote:Originally posted by belgarion

Ain't all over yet dude. Having a positive cashflow (or near positive cash flow) gives the enterprise value ...




Like saying a tree still have leaves even as the rot moves from the trunk into the roots and branches.

Debt > enterprice value in this case so equity < zero. Simple primary one arithmetic.

[winner69]

quote:Originally posted by belgarion



Ain't all over yet dude. Having a positive cashflow (or near positive cash flow) gives the enterprise value ...




Geez belg .... I thought u had done your homework

Reported free cash flow (operating cash flows less capex) over the last few financial years


2003 $3.1M
2004 $14.7M
2005 -$5.6M (negative)
6 months (Dec 05) -$3.9M (negative)


So over the 3 1/2 years cumulative cash generated $8.3M .... that sure does drive some real enterprise value doesn't it

OK - the numbers above do include interest paid but this was only $8.7M .... but on the other hand does inlcude those government grants of about $4M as income

Interestingly only spent $1M on capex in the six months to Dec 05 and probably very little over the last 6 months (bank has not allowed) .... machinery must be in need of some sustenance capital spend at least ..... or is the number 8 fencing wire holding everything together?

Good luck anyway belg .... as you pointed out the other day the likes of us (snipers and winners) hang on for the ride, risking nothing ..... so I'll be waiting to see what eventuates before deciding to get on board .... thats the nature of the game eh

If there is a turnaround on the cards plenty of money to be made .... only when we know the new rules

[D_Pick]

quote:Originally posted by winner69

Reviews held on the 20th of each month .... last Thursday with a weekend to think about it?


If these interim non-formal bank reviews are price sensitive then a trading halt should occur each review.

As a trading halt didn't occur on the 20th then the bank probably isn't calling this one IMO

One would expect that if FTX was in recievership today then the trading halt announcement would be worded differently

[Base Trader]

As I have had a wee bit of experience in wording these fun facility documents I believe that the document will have a number of means to capture default/material adverse change - and not just a 20th of month review. The ANZ could have not had all info by 20th and reserved its righte etc.

But it is all speculation anyway. Either there is an investor or the company is for formal restructure. Both will be shareholder negative as any new investor would require significant dilution as they are in an extremely strong bargaining position and receivership would likely see the last of the equity swallowed up in accountants and lawyer fees.

And Belg - the company will have enterprise value - just not for the current shareholder base or at the current debt levels. Shareholders lose all and some debt is forgone and we have a viable entity (atleast for a while anyway).

[winner69]

quote:Originally posted by Base Trader


..... Belg - the company will have enterprise value - just not for the current shareholder base or at the current debt levels. Shareholders lose all and some debt is forgone and we have a viable entity (atleast for a while anyway).




Well said Basetrader ..... thats what some don't seem to get

[sniper]

If ANZ takes a hit on its loan as the article suggests, shreholders can forget about there being any remaining value in their shares (equity). ANZ might just be charitable and allow for 1 cent per share in value.

Time to get a good class action lawyer from Australia, Belg ad others, to recover your money.

Two rescuers vie to pull Feltex up off the carpet

Tuesday July 25, 2006
By Richard Inder

Two bidders are vying to put carpet-maker Feltex back on a sound financial footing, industry sources say.

The names of the potential buyers are not known, although Australian carpet-maker Godfrey Hirst has been suggested as one.

Godfrey Hirst last year suggested a merger with Feltex but was rebuffed.

Feltex yesterday called a halt to trading in its shares because it was in negotiations "for a restructuring of the company".

It declined to comment further, saying only that the halt would continue for at least two days. The shares last traded at 21c, well below the 2004 float price of $1.70 a share.

No one from Godfrey Hirst was available for comment.

Whatever happens Feltex shareholders do not look to be in a strong position.

Last month, the company said it had breached its loan terms with ANZ and needed more money. It hopes to receive $19 million from asset sales next year.

But Feltex is now at the mercy of ANZ, which has given it until September to find a new backer.

Informed observers say it can be optimistically valued debt-free as a multiple of around six times this year's trading profits - earnings before interest, tax depreciation and amortisation.

Feltex has already promised that in the year to June, trading profits will be about $20 million, suggesting the company is conservatively worth $120 million - less than its $129 million borrowing.

It needs $60 million more to reduce its debt to put it on an even keel. Even if it gets that - and this is by no means certain - the ANZ looks likely to have to take a loss.

[winner69]

Sniper .... but Tim says he has shareholders interests at heart .... do whats best for shareholders .... after all he is one as well .... TRUST ME he says

Is this the same Saunders who is on the NZX board as well?

[D_Pick]

Can someone speculate what loss ANZ is "likely" to take if a new investor enters the frame; either

a couple of months interest written off or a capital loss i.e. part of the $129m total loan amount is written off


If one of these two unnamed investors injects ($15-$20m) plus a rights issue to existing shareholders for ($15-$20m) plus non core asset sales as announceed of ($19m) then we are looking at a $49-$59m reduction in debt. Under this type of scenario why would ANZ need to take any loss as FTX could trade through

Couple of upside EBITDA scenarios from the current $20-$21m level

NZD currency continuing to fall against AUD (EBITDA impact + $5m) $15m of operating expenses taken out the business in 2006 via restructuring flows through to increased margins (+ $5m EBITDA) lower interest expense due to reduction of debt after new capital injection (+ $4.5m EBITDA)


quote:SIP Payments

SIP payments received in a financial year are applicable to expenditure incurred in the prior financial year. Payments are received in September and June. The bulk of the payment is received in June. Feltex does not recognise any SIP payment in EBITDA until it is received. Feltex has received SIP payments in financial year 2006, with respect to expenditure incurred in the financial year 2005, of NZ$8.5 million. Of this amount, pursuant to IFRS, NZ$5.2 million will be brought to account in EBITDA in financial year 2006. For the financial year 2005, restated to IFRS, the Company recognised SIP payments of NZ$3.2 million as a contribution to EBITDA. The SIP program is extended to 2010, with applicable grants in 2010 being received in 2011. Feltex anticipates receiving SIP payments of about NZ$4.6 million at present exchange rates in financial year 2007, which would be reflected within EBITDA.




As SIP payments are an incentive based scheme one can assume that certain expenditure would not be incurred in the previous financial year if it was not anticpated to be repaid via the SIP program in the following financial year. So for my analysis SIP payments should be included in EBITDA. Especially as they are conservatively accounted for i.e. only inlcuded in EBITDA after actual payments are recieved.

The overall effect of SIP payments should be fairly netural over time, if you don't expect to receive a SIP payment next year then don't incur the expense this year so total EBITDA over time from SIP related expenditure and subsequent repayments should even out.


Based on the above scenario there is still room to negotiate, not long to find out the results

[lambton]

quote:Originally posted by winner69

Sniper .... but Tim says he has shareholders interests at heart .... do whats best for shareholders .... after all he is one as well .... TRUST ME he says

Is this the same Saunders who is on the NZX board as well?


I think so. he he

[Snow Leopard]

I hear that there are two potential investors who are currently in discussion with each other:
"You in invest in the thing",
"No, you do it"

Paper Tiger :D

[blackcap]

quote:Originally posted by Paper Tiger

I hear that there are two potential investors who are currently in discussion with each other:
"You in invest in the thing",
"No, you do it"

Paper Tiger :D


LOL PT :P

[warthog]

quote:Originally posted by belgarion

D_Pick ...

I think the second two 'up-side' scenarios are already included in the $20-$21 estimate of EBITDA ... The exchange rate may be too ...

Agree that I simply can't see the bank making a loss unless FTX goes down ...


This depends substantially on how much pain the bank will endure if FTX goes down. All banks seek to minimise pain endured.

[Halebop]

quote:Originally posted by belgarion


I hope the 'investor' does NOT get to inject $15-$20 except by underwriting a rights issue. To do so would be a slap in the face to the new owners like me who are readying cash to buy more of FTX. If the new investor wants a big slice of FTX then the rights issue should be painful ... 1:1 @ 50 cents [}:)]

No backdoor, subsidised, chummy, buddy sales off market thank you! This would disadvantage existing (read new) shareholders.


How many rights issues in successful companies are executed at a premium? The chance of one in a perennial non performer like FTX is slight.

A rights issue at a discount does not prejudice the interests of existing shareholders. They all have the "right" to participate on an equal basis at the discounted price. Dilution only occurs to those who can't participate, which is precisely why rights issues depress share prices.

Therefore as rights issues depress share prices and the current price around 20 cents, shareholders may well be better served by a "backdoor, subsidised, chummy" capital raising. With a negative net enterprise value other people's money seems far more desirable than throwing good after bad.

Personally I'm a little bemused by the interest in FTX. I'd rather chance my money on a company with a successful track record than a debt laden turnaround of a turnaround of a turnaround. This is pure speculation with little evidence of a successful probability.

The one thing in shareholders' favour is that there is plenty of money sloshing around out there. But a recapitisation will do nothing to mend FTX's pedigree without some major changes. This requires a change of control and more probably the prospect of wider industry rationalization.

Good luck to punters! (the investors are long gone).

[D_Pick]

thanks belgarion, schoolboy error, interest expenses obviously aren't going to effect the EBITDA number (silly me), I must have been subconsciouly thinking of the bottom line NPAT.

I didn't think the currency was factored into the $20-21m EBITDA guideline yet otherwise FTX's announcement on the 23rd July wouldn't have included the following statement


quote:The Company also confirms that had current exchange rates
prevailed for the 2006 financial year, normalised EBITDA (including the SIP contribution and the provision for foreign exchange losses) would reflect an EBITDA of NZ$25 million to NZ$26 million for the financial year 2006.


I'm expecting the NZD to weaken further against the AUD over the next 12 months

Re: operating costs - the sales teams and internal organisation structure has had considerable change in the last financial year including $13.3m of redundancies. As a result of less employees and new organisation structure going forward I'm expecting further positive contributions to EBITDA in the 2007 financial year and beyond.

[sniper]

quote:Originally posted by belgarion


quote:Originally posted by D_Pick


If one of these two unnamed investors injects ($15-$20m) plus a rights issue to existing shareholders for ($15-$20m) plus non core asset sales as announceed of ($19m) then we are looking at a $49-$59m reduction in debt. Under this type of scenario why would ANZ need to take any loss as FTX could trade through


I hope the 'investor' does NOT get to inject $15-$20 except by underwriting a rights issue. To do so would be a slap in the face to the new owners like me who are readying cash to buy more of FTX. If the new investor wants a big slice of FTX then the rights issue should be painful ... 1:1 @ 50 cents [}:)]

No backdoor, subsidised, chummy, buddy sales off market thank you! This would disadvantage existing (read new) shareholders.


New investor? You know the risks when you bought in so you should expect no consideration. Get ready to suck on a heavily discounted rights issue after a placement to effect control to new investor.

My guess - 300m shares issued to new investor and bank at 8 cents per share followed by a 1 for 1 at 8 cents.

[lambton]

Dilution to a s/p of 10 cents then - ouch

[D_Pick]

sniper I thought FTX was going into receivership yesterday?

This dilution scenario sounds remarkably like tentative steps towards a positive way forward/turnaround story

Funnily enough I can now see one similarity with the RMG link you've been promoting

150m odd existing shares
300m new shares to New cornerstone investor @ 8 cents
300-450m new shares to rights issue @ 8 cents (depending how 1 for 1 is calculated)

Total shares = 750-900m shares on issue which is getting pretty close to the shares outstanding for RMG when they closed shop. I now see a link?

How did you calculate the 10 cents per share after recapitalisation lambton

[lambton]

quote:Originally posted by D_Pick

sniper I thought FTX was going into receivership yesterday?

This dilution scenario sounds remarkably like tentative steps towards a positive way forward/turnaround story

Funnily enough I can now see one similarity with the RMG link you've been promoting

150m odd existing shares
300m new shares to New cornerstone investor @ 8 cents
300-450m new shares to rights issue @ 8 cents (depending how 1 for 1 is calculated)

Total shares = 750-900m shares on issue which is getting pretty close to the shares outstanding for RMG when they closed shop. I now see a link?

How did you calculate the 10 cents per share after recapitalisation lambton


Very roughly - how long is a piece of string?

600m * 8 c plus 150m * 20 c (rough closing price on NZX) / 750m

[winner69]

quote:Originally posted by sniper

My guess - 300m shares issued to new investor and bank at 8 cents per share followed by a 1 for 1 at 8 cents.




That raises your $60M .... leaves debt at around $50-$60M

But 900m shares

Say turnaround and Feltex valued at $250M (EV) less debt would give a shareprice sometime in excess of 20 cents

Maybe, maybe an opportunity here ..... but would need more than new capital .... needs a new leadership team and clear strategy going forward

Probably have to wait until Thursday at earliest to find out

[sniper]

EBITDA does not change so why would EV change from $120m to $250m?

All that changes is that net debt is reduced from $129m to $69m.

[winner69]

quote:Originally posted by sniper


EBITDA does not change so why would EV change from $120m to $250m?

All that changes is that net debt is reduced from $129m to $69m.


Taking a longer term view mate .... new management and more focused strategy and maybe maybe EBITDA doubles ..... trebling your money over a couple of years OK

All depends on the other things that need to happen besides the cash injection

[sniper]

quote:Originally posted by D_Pick

sniper I thought FTX was going into receivership yesterday?



The placement and rights issue is one scenario.

The receivership one is the other.

Here's another :

450m new shares placed at 5 cents = $22.5m.
Then, 4 for 3 at 5 cents = $40m.
So now, 1.4 billion shares.

Result : New investor owns 75% plus shares taken up in under-write.

Existing shareholders don't like it? ANZ holds all the cards and has a shotgun to Feltex's head. How does receivership sound?

Be fascinating to see if trading halt is lifted tomorrow.

[winner69]

quote:Originally posted by sniper
.....

Result : New investor owns 75% plus shares taken up in under-write.

Existing shareholders don't like it? ANZ holds all the cards and has a shotgun to Feltex's head. How does receivership sound?



But Tim has shareholders at heart .... TRUST ME he said

[sniper]

quote:Originally posted by winner69


quote:Originally posted by sniper


EBITDA does not change so why would EV change from $120m to $250m?

All that changes is that net debt is reduced from $129m to $69m.


Taking a longer term view mate .... new management and more focused strategy and maybe maybe EBITDA doubles ..... trebling your money over a couple of years OK

All depends on the other things that need to happen besides the cash injection


Trouble is - could be like RMG.

EBITDA keeps going down after numerous placements and rights issue - and get this, many changes of management and directors as well!

A restructuring of Feltex (assuming it does not go into receivership) is but a capital stabilising exercise to ward off ANZ from pulling the pin.

[Snow Leopard]

quote:
FTX
26/07/2006
RESTRUCT

REL: 0926 HRS Feltex Carpets Limited

RESTRUCT: FTX: UPDATE ON NEGOTIATIONS

The Board of Feltex Carpets Limited advises that it is continuing with
negotiations for a potential restructuring of the Company. The Board advises
there is currently no certainty that a deal will be concluded nor of the
terms on which any such deal would be struck. However if an agreement was
concluded, the value to shareholders arising from that restructuring would be
materially below that at which the shares last traded.

Upon conclusion of the negotiations full and detailed information will be
provided to the market and shareholders.

Ends.

For further information, please contact:
John Walsh - 0275 660 776

Michael Dunlop - 0275 747 587
End CA:00134483 For:FTX Type:RESTRUCT Time:2006-07-26:09:26:08

[Snow Leopard]

So not only an admission that existing shareholders are UNDERLAY but also "full and detailed information will be provided" marks another departure from the existing Feltex norm.

[Toddy]

How do you get materially below 21 cents...... 1 cent.

[trackers]

Wow...Not good

[Fodder]

FTX
26/07/2006
HALT

REL: 0959 HRS Feltex Carpets Limited

HALT: FTX: FTX- Lifting of Trading Halt of Securities

NZX Regulation Announcement
Feltex Carpets Limited (FTX)
Lifting of Trading Halt of Securities

NZX Regulation advises that the trading halt placed on FTX securities on
Monday 24 July has been lifted.

[winner69]

Trading halt lifted .... at least an opportunity for punters to get something now .... instead of nothing under receivership?

See belg offering 7 cents already

[sniper]

Rights issue at 5 cents looks more likely by the day?

[Fodder]

Might have to update the thread title then Winner

[Fodder]

Ride it out Belg...no point selling for peanuts now you've gone this far... only option I see is to ride it out with the punters.

[sniper]

Get a good class action lawyer.

[Fodder]

Holy **** down to 11 cents, 47.6% knocked off the Market Cap in 30 minutes trading...I wonder if this is anywhere near the value the press release this morning hinted at:

"materially below that at which the shares last traded"

But what would expect when you issue a statement like that?

[winner69]

The most depressing part of the statement is The Board advises there is currently [b[no certainty that a deal will be concluded [/b] nor of the terms on which any such deal would be struck

PR speak for we are not in control .... the bank has the gun to our head .... and the suitors are not playing ball

[redzone]

agree with snipe....this whole thing needs looking at from the sellers at the IPO to the lead sharebrokers who bought it to market...the wild wild west is still here...

[lanenz]

Im thinking that if i held this stock and i could bail out at 10 cps then i would be lucky. single digits later today or tomorrow

[biker]

quote:Originally posted by winner69

The most depressing part of the statement is The Board advises there is currently [b[no certainty that a deal will be concluded [/b] nor of the terms on which any such deal would be struck

PR speak for we are not in control .... the bank has the gun to our head .... and the suitors are not playing ball




And we have been instructed to lift the trading halt to let the price collapse ;)

[trackers]

quote:Originally posted by winner69

The most depressing part of the statement is The Board advises there is currently no certainty that a deal will be concluded nor of the terms on which any such deal would be struck

PR speak for we are not in control .... the bank has the gun to our head .... and the suitors are not playing ball




Yup, we called a trading halt because we thought we had a deal sorted - now we just wanna let you know that unless we allow the shareholders to be raped and pillaged, the suitors will walk away - and the bank cant have that!

I nearly bought some FTX yesterday at 20...Im off to buy a lotto ticket

[Krustytheclown]

TITS UP[:0].

Belg......geeeeeesss this mutt must be biting hard......what a loss to bare.
You could take a 10% stake soon easily!

Best to jump before 5-8c I reckon.

Condolences to all FTX holders:(.

G.

[D_Pick]

Not a good trading halt or announcement [V]

Again the market is left to speculate

What does "materially below" indicate in this circumstance 25, 50, 75 or 90% lower than the previous 20 cent closing price. On the otherhand I guess the board doesn't want to announce the price in case they can find another investor at a higher valuation.....

[evedder]

Day traders may have had some fun today - low of 11 and currently rebounded to 15.

[lambton]

[quote]Originally posted by Lawso

Forsyth Barr put out a positive report on FTX last week. Summarised as follows: "We consider FTX has a number of attractive investment fundamentals including strong brands and an attractive FY05 yield of 10.3%. FTX is trading at a 25.0% discount to our $2.10 valuation and we reiterate our BUY recommendation."

And eight months on, single digit approaching. Forbars must now be wondering if a class action is in the wind.

[Enumerate]

The parallels with Murray Bolton and Skellerup are uncanny.

- Household brands (Levenes, Palmers, etc)
- High debt vechicle (management buyout in Skellerup's case)
- "Retail" sector with a high exposure to the company

Follow this up with:

- Gross mismanagement of the business
- rapacious banks seeking only to defend their interest
- endless worthless pronouncements from management
The only significant departure in stupidity, in the Feltex case, is that they had a 60cent offer on the table - that they spurnded.

Beware the power of the banks ... they ruthlessly follow the ancient economics principle: "a bird in hand is worth two in the bush".