Wellington, Sept 25 NZPA - Debt-laden Fisher & Paykel Appliances is in talks with lenders over its loan covenants, and may have to write down the value of its American assets.

The company last night issued a profit warning, saying it now expects to make only 40 percent of the net profit of $32.8 million it forecast for the 2010 financial year, between $20m and $23m -- even though it told investors last month it was on track for its forecast profit.

It blamed a weak and competitive United States market for its latest problems, and said in a statement that its North American sales in US dollar terms were now forecast to end the year about 12 percent below the level assumed in May.

"Directors are reviewing the carrying value of assets for any possible impairment," it said.

The company said it expected to post a net loss of between $2m and $5m this fiscal year, compared with a May forecast of a net profit of $11.7m.

F&P Appliances signed on to the Government's nine-day working fortnight job support scheme in March. It brought in a 35-hour week in a bid to save 60 jobs, but in April still had to cut 30 jobs. It said in July it was putting 350 refrigeration assembly workers in Auckland back on a full 40-hour week.

These measures followed Prime Minister John Key's statement in February that the Government was likely to make available "last resort" government assistance in the event that there was a need to bail out an important company, such as Fisher & Paykel. Letting such an important company fail because of a temporary crisis would be unacceptable, he said.

F&P Appliances has been cutting its debts -- reported to be $200m -- by bringing in Chinese white-goods maker Haier as a 20 percent shareholder and raising money through a rights issue.

But Reuters newagency reported the company's weaker first-half performance was likely to fall outside an "adverse variance" allowed by its loan covenant with bankers.

Its banks were supportive, given a steady reduction in its debts, and they were looking to waive compliance for the first half, provided the company's new budget forecasts met the variance test in December and March, the company said.

The announcement was made after the market closed, with the shares down 1.3 percent at 74c.

The share price climbed 60 percent after the whitegoods maker brought in Haier as a strategic investor in May, but down 22 percent for the year to date.

The company's former chief executive John Bongard is battling prostate cancer and is due to retire on Monday.

Stuart Broadhurst, former chief operating officer appliances, will be acting chief executive, as well as retaining his current role, while the company recruits a new chief executive.

The company paid its management personnel a total $13.86 million in the year to March 31, 2009, up from $10.59m in the previous year. The company said $1.5m of the increase in short-term benefits was from changes in the exchange rate.

F&P recently announced the sale and lease back of the East Tamaki site, covering 14.4 hectares and over 62,000 square metre of offices and factory buildings, that hold its head office.

Its Dunedin, Brisbane and California factories have been moved to cheaper, more convenient locations in Mexico, Thailand and Italy.

And it has sold its 16.45ha Mosgiel site on the outskirts of Dunedin to Fonterra.

The company has offices in New Zealand, Australia, the United States, United Kingdom, Mexico, Europe, Singapore and Thailand, in addition to its cornerstone shareholder Haier, based in China.

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