The New Zealand Herald

Feltex court date laid down

- Duncan Bridgeman

Former Feltex directors will be back in court in November for the second stage of a civil trial that has weaved its way through the highest courts over the last decade.

A stage two hearing has been set down for five weeks from November 4, with lead plaintiff Eric Houghton cleared to return and represent investors in the case.

This follows the Supreme Court paving the way for former Feltex shareholde­rs to pursue the directors of the failed carpet maker over whether a false forecast in the prospectus left them out of pocket.

The Herald understand­s Justice Robert Dobson intends to issue a minute on the appropriat­e procedure to deal with certain issues that were highlighte­d in the Supreme Court decision last August.

That decision by Chief Justice Sian Elias and Justices Susan Glazebrook, Mark O’Regan, Terrence Arnold and Stephen Kos ruled the 2004 Feltex prospectus contained an untrue statement over forecasts for that year — enough to warrant the second stage of a trial.

The decision veered from the Court of Appeal, which in 2016 deemed the misstateme­nt to be immaterial informatio­n for investors.

The High Court will now have to work out whether the untrue statement caused a loss for investors.

“This means a court must determine whether the effect of the untrue statement was such that the market value of the securities for which the investor subscribed would have been lower than the price paid if the misleading statement had not been made or, put another way, if the prospectus had complied in all respects with the Securities Act and the Securities Regulation­s,” the Supreme Court decision said.

Feltex was floated on the stock exchange in 2004 at an issue price of $1.70 a share, but those shares were “effectivel­y worthless” 18 months later when the company was put into liquidatio­n. Some 3639 former Feltex shareholde­rs sought $185 million from former Feltex directors and IPO promoters. The Supreme Court judges dismissed an appeal against First NZ Capital and Forsyth Barr as joint lead managers, saying those investment firms were not promoters under the act.

Former directors Timothy Saunders, Samuel Magill, John Feeney, Craig Horrocks, Peter Hunter, Peter Thomas and Joan Withers, sale promoter Credit Suisse Private Equity and vendor Credit Suisse First Boston Asian Merchant Partners now face the second tranche of the trial.

 ?? Photo / David Rowland ?? Feltex directors John Hagen (left), Peter Thomas, Tim Saunders, Peter Hunter and John Feeney at a media conference in 2010.
Photo / David Rowland Feltex directors John Hagen (left), Peter Thomas, Tim Saunders, Peter Hunter and John Feeney at a media conference in 2010.

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