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11 October 2007
News release
Securities Commission Issues Report on Feltex Inquiry
The Securities Commission has completed its inquiry into the IPO prospectus of Feltex Carpets Limited ("Feltex") 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.
"Careful attention to continuous disclosure and financial reporting is vital to allow investors to make informed decisions about holdings in listed companies", said Commission Chairman Jane Diplock. "This becomes all the more important when a company is facing difficult circumstances."
Matters arising from the Commission's findings have been referred to the Registrar of Companies, the Accounting Standards Review Board, and the New Zealand Institute of Chartered Accountants.
The Commission obtained documents and heard evidence at hearings from a number of people including former directors and management of Feltex and representatives of Ernst & Young and ANZ.
The complete report is available on the Commission's website.
Ends
Contact: Poly Banerjee 04 471 7666