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Feltex Carpets Limited
IPO Prospectus, Financial Reporting and Continuous Disclosure

Part II THE COMMISSION'S REVIEW

12.

The Commission conducted a review of the prospectus dated 5 May 2004 and FTX's compliance with financial reporting and continuous disclosure obligations in the period between its listing in 2004 and the appointment of liquidators to the company in late-2006. This review has been carried out under section 10(c) of the Securities Act 1978, which provides that it is a function of the Commission "[t]o keep under review practices relating to securities, and to comment thereon to any appropriate body."

13.

The Commission considers that the matters under review raise issues of securities law and practice upon which it is appropriate for the Commission to comment. The Commission has decided to comment by way of this report.

Procedure

14.

The Commission determined the procedures for this review.

15.

In a formal inquiry, the Commission heard evidence from the following:

(a)

Mr Timothy Saunders, former Chairman of the Board of FTX;

(b)

Mr Peter Thomas, former Chief Executive Officer and Director of the Board of FTX;

(c)

Mr David Hunter, former Director of the Board of FTX;

(d)

Mr John Hagen, former Director of the Board of FTX;

(e)

Former Chief Financial Officer FTX;

(f)

Head of Corporate Portfolio Management ANZ "CPM";

(g)

Chief Risk Officer ANZ;

(h)

Head of Diversified Industrials ANZ;

(i)

Mr Gordon Fulton, Partner, Ernst & Young, New Zealand;

(j)

Mr Stuart Painter, Partner, Ernst & Young, Australia;

(k)

Mr Kevin Simpkins, Kevin Simpkins Advisory Services Limited (Commission's retained accounting expert); and

(l)

Mr Charles Cable, Deloitte, Auckland (FTX Directors' retained expert).

16.

The Commission reviewed documents received from:

(a)

FTX, FTX receivers, and FTX liquidators, which included board papers, reports provided to ANZ; and financial documents;

(b)

ANZ which included loan agreements, memoranda, correspondence, and reports; and

(c)

FTX auditors which included reports; memoranda; correspondence; and working papers.

17.

The Commission retained a market analysis expert; an accounting expert; and analysts to examine various financial matters.

18.

Confidentiality and privacy orders were in place throughout the inquiry.

19.

All parties to the inquiry were afforded an opportunity to be represented by counsel. Oral evidence was recorded and transcripts were provided to the witnesses.

20.

After receiving evidence, the Commission prepared a confidential consultative report and invited comment from affected parties. These parties were given a full opportunity to respond with submissions and to provide further evidence to the Commission.

21.

The Commission has carefully considered all evidence and submissions before publishing this report.

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Feltex Carpets Limited IPO Prospectus, Financial Reporting and Continuous Disclosure

Feltex Carpets Limited
IPO Prospectus, Financial Reporting and Continuous Disclosure