Feltex float nothing to do with me, says Thomas
Former Feltex executive director Peter Thomas says he played no role in the decision to float the carpet company in 2004, despite his position as head of Credit Suisse First Boston's private equity activities in Asia/Pacific at the time.CSFB Private Equit
Duncan Bridgeman
Wed, 28 Apr 2010
Former Feltex executive director Peter Thomas says he played no role in the decision to float the carpet company in 2004, despite his position as head of Credit Suisse First Boston’s private equity activities in Asia/Pacific at the time.
CSFB Private Equity and its Asian Merchant Partners offshoot sold Feltex to public shareholders in May 2004, for approximately $254 million.
All of that was lost when the company went into receivership and subsequently into liquidation in September 2006.
Mr Thomas, who is on record saying he benefited from the IPO through a “small” stake in Asian Merchant Partners, yesterday gave evidence as a defendant in the trial of five former Feltex directors.
They are charged with failing to disclose a breach of banking covenants in the December 2005 half-year accounts and failure to classify debt to the ANZ Bank as a current liability.
In a slight deviation from the case, Mr Thomas’s lawyer, Paul Davison, QC, asked what part he played in the initial public offer of Feltex.
“I played no role in that decision,” Mr Thomas told the court.
Nor was he involved in the decision to issue $60 million worth of bonds in 2003 to pay down debt and help prepare the company for sharemarket listing, he said.
On Monday, Feltex’s former chief financial officer Des Tolan told the court he sometimes liaised with CSFB’s New York office, but he also did not elaborate on who the key players were.
NBR understands there were five partners of CSFB Asian Merchant Partners who received the proceeds from the Feltex float, promoted to investors by NZ brokers Forsyth Barr and First NZ Capital.
However, the identities of the individuals behind the private firm remain secret after the Securities Commission saw fit to grant a waiver preventing that disclosure from the prospectus.
Feltex made sense
Mr Thomas joined CSFB Private Equity in July 1996 after being chairman of CSFB’s investment banking operations in Asia / Pacific since 1994. He’d worked for CSFB since 1980 in various jurisdictions, including New York, Australia and Hong Kong. Prior to that he’s worked with Kidder, Peabody & Company and Chase Manhattan.
He told the court yesterday that in 1996 he saw in a newspaper article that BTR Nylex was for sale and put forward an acquisition proposal to CSFB in New York.
“The logic of taking New Zealand wool and turning it into carpets made a lot of sense.”
Mr Thomas then headed a team to make the acquisition and the company to be known as Feltex was purchased in early 1997.
Trading through the late 1990s was difficult and Feltex faced its first covenant breach with the ANZ during those initial years.
The company came back well though, Mr Thomas said, and CSFB began to consider realising its investment around the turn of the century.
The firm had some discussions with rival player Cavalier Carpets about a potential merger.
Exit plan B
Then US company Shaw Industries put its Australian operation on the block, which put Feltex in a difficult position.
On the one hand, should Shaw’s be acquired by a competitor it could make life hard for Feltex, while on the other hand, CSFB saw some synergies if it purchased Shaw, which was strong in synthetic products.
“So we did our due diligence and made an offer,” Mr Thomas said.
Unfortunately, not long after that purchase, the economy turned down and Feltex came under pressure.
ANZ was again actively involved in steering the company out of a potential default situation.
The next year, Feltex raised the $60 million through the bond issue, less than 12 months before the ill-fated IPO went ahead.
CSFB’s attitude at that point was to look at the market for an exit strategy.
“We couldn’t see any other bolt on acquisition opportunities … investment banking presentations led to a move to a public listing and an IPO in the New Zealand market,” Mr Thomas said.
Case continues
Duncan Bridgeman
Wed, 28 Apr 2010
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