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Ex-ANZ executive tells of Feltex loan woes

Contributor:
Fuseworks Media
Fuseworks Media

Auckland, April 12 NZPA - Feltex Carpets was in trouble with its debts from the middle of 2005, according Peter Holland, an ANZ executive in charge of problem loans.

Mr Holland was giving evidence for the prosecution at the trial of five former directors of Feltex before an Auckland District Court judge.

When Feltex was floated on the sharemarket in 2004, more than $250 million was raised from mostly New Zealand investors. It went into liquidation in 2006.

Former directors Peter Hunter, Peter Thomas, Michael Feeney, John Hagen and former chairman Tim Saunders face charges laid by the Registrar of Companies relating to information provided in the company's interim financial statements for the six-month period ended December 31, 2005.

The charges alleged the directors failed to disclose a breach of Feltex's banking covenants, and did not properly classify its $A119.5m ($NZ157m) ANZ Bank debt facility.

Mr Holland was the head of corporate portfolio management at the ANZ, a division which was called in to deal with problem loans of $5m or more.

He said at least two of the men facing charges knew that any involvement of his division was serious as it was known as "Bad Bank".

By mid-2005 Feltex had a $A120m debt facility, but agreed to an additional short-term loan of $A10m to help it close its Braybrook plant in Melbourne, Mr Holland said.

The company's credit rating was a low 5F by October 2005, but had slumped even further to six minus by the end of November 2005, he said.

Each of the five directors faces fines of up to $100,000.

The directors argue they had taken all reasonable steps and if their accountants had not failed in its obligations, the group would not be in court today.

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