FELTEX CARPETS LIMITED (FTX)

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

apparently liquidators have settled with former directors ahead of a trial scheduled for next week - the claims were that directors Peter Thomas, Peter Hunter, Michael Feeney, and John Hagen failed to act in good faith, failed to act in the best interests of the company, reckless trading, failure to comply with the disclosure provisions and had allowed the company to trade while "balance sheet insolvent" - this "confidential settlement" is just another failure of disclosure - sweeping the details under the carpet is typical of a secretive mindset and system that continues to discourage investment in New Zealand's capital markets

delisted after NZX Market Supervision (NZXMS) advised that FTX ordinary shares will cease to be quoted, and FTX will be delisted, from the close of business on Monday, 20 September 2010. FTX has been in suspension since 25 September 2006, after being placed in receivership, and is being delisted as part of a process that NZXMS is undertaking to delist issuers that have been in long term suspension on NZX markets

directors appear in the Auckland District Court facing criminal charges that carry a penalty of up to $100,000 - remanded to re-appear on April 7 were Timothy Ernest Saunders, Peter Thomas, Peter David Hunter, John Michael Feeney and John Carlaw Hagen - each faces two charges under section 36A of the Financial Reporting Act - all have pleaded not guilty (the charges relate to information provided in the company's December 31, 2005 half-yearly financial statements in which Feltex Carpets is alleged to have failed to disclose a breach of its banking covenants and did not properly classify its debt)

reports in the NZ Herald that the date for shareholders to opt-in to the legal claim has been extended to around next Easter - shareholder organiser Tony Gavigan says that so far 858 Feltex investors claiming over $45 million plus interest had indicated in writing they wished to join the claim

a High Court judge rules that legal action against former chairman Tim Saunders, six other directors, and four adviser firms, can go ahead

apparently Justice French has reversed the "opt out" order (in a lawsuit being mounted by shareholders) and given shareholders until 19 December 2008 to "opt in"

reports that Feltex's liquidator, McDonald Vague, plans to push ahead with legal action against seven former Feltex directors once it secures the necessary financial backing

reports that only 30 of the estimated 10,000 Feltex shareholders have opted out of the class action

legal action against former directors and advisers is being mounted by a group of shareholders - if you bought shares in the June 2004 IPO or before 1 April 2005 and lost money by selling those shares or by holding them until the company went into liquidation, you can do nothing (thereby participating in the action) or you can opt out of the action by 4pm on 11 April 2008 by writing to The Registrar of the High Court, Private Bag 4618, Christchurch - if you remain a member of the group you will apparently not be liable for any legal costs except by way of deduction from any award made to you pursuant to the proceedings - it would appear therefore that you have nothing further to lose by staying a member - we applaud the initiative of those orchestrating this action but have reservations about how legal and other action costs will be funded if the action is unsuccessful - these actions are notoriously expensive - who picks up the tab if and when the budget of $2.5m is exceeded?

Sue Newberry, associate professor of accounting at the University of Sydney, representing the Campaign Against Foreign Control of Aotearoa, believes Feltex misled investors at crucial times when reporting its financial situation and believes the Securities Commission should revisit its assessment - she also criticises Feltex's auditors Ernst & Young

the Securities Commission has completed its inquiry into the IPO prospectus of Feltex Carpets Limited and the company's compliance with financial reporting and continuous disclosure obligations - the inquiry concluded that: - the IPO prospectus was not misleading in any material particulars; - Feltex failed to disclose certain material information to the market concerning changes to its banking facility agreement with ANZ in October 2005; - Feltex failed to disclose the breach of its banking covenants and did not properly classify its debt in its 31 December 2005 half-year financial statements; and - the work undertaken by Ernst & Young New Zealand in its review of Feltex's 31 December 2005 half-year financial statements failed to meet the required standards

lawyer Garry Wakefield is about to file a statement of claim alleging misleading and deceptive conduct , and that negligent misstatements were made in the float prospectus

reports that the company's liquidators consider former directors to be liable for more than $20m in connection with the collapse of Feltex and will file proceedings in the High Court, possibly later in the year

Alan J Robb, Adjunct Professor at Saint Mary's University (Halifax, Canada) considers the Feltex Investment Statement dated 5 May 2004 to have been more misleading than that issued by Vertex - Chris McVeigh QC has recommended that Wakefield Associates issue joint representative proceedings forthwith for recovery of their clients' losses against the Feltex IPO vendors and promoters - letters have now been sent to the other 8,000 initial investors in the Feltex IPO, advising the above matters, and inviting them to join 500 clients of Wakefield Associates in a joint recovery action

the Receivers and Managers announce the completion today of the sale of the assets and operations of Feltex Carpets Limited to the Godfrey Hirst Group - following the completion of the sale, the name of Feltex Carpets Limited has been changed to EXFTX Limited

Tim Saunders, Michael Feeney, John Hagen and David Hunter resigned today as directors of Feltex Carpets Limited - Peter Thomas earlier resigned on the date receivers were appointed to the Company on 22 September 2006

Feltex's Receivers and Managers today announced that they have accepted an offer from the Godfrey Hirst group to acquire the Feltex business as a going concern

securities suspended following the appointment of receivers