UPDATE:F&P Appliances Says New Zealand PM's Comments 'Very Helpful'

Fisher & Paykel Appliances Ltd. (FPA.NZ) said Tuesday comments by New Zealand Prime Minister John Key that the government was prepared to step in to assist the company if needed were "very helpful."

Fisher & Paykel Appliances Chief Executive John Bongard told Radio New Zealand that Key telephoned him Monday to say the government didn't want the iconic New Zealand whiteware company to "fall into the wrong hands."

Key made the call after Fisher & Paykel Appliances' shares plunged 35% on a profit warning and news it was reviewing capital-raising options, including issuing equity to a cornerstone investor.

Earlier this year, Key raised the prospect of large-scale corporate bailouts but didn't specify which companies would be eligible. At the time he said that Treasury was "scoping" different companies.

On Tuesday, the New Zealand Herald quoted Key as saying the government didn't want to become a primary banker, but it wasn't ruling out the option of helping Fisher & Paykel Appliances.

"Governments around the world have taken that course and we reserve the right to do so," Key said.

His comments gave the beleaguered stock a boost early Tuesday. The stock jumped 13.9% to NZ$0.74 at 2150 GMT.

"I would hope that investors would see more value in the business than they currently do and I would hope for an improvement in the share price today," said Bongard.

Macquarie Equities broker Brad Gordon said the survival of Fisher & Paykel Appliances was no longer in question after Key's comments, and the stock would likely rally.

He said he expected government aid would be a last resort and it would only intervene for well managed companies.

"I think Fisher & Paykel Appliances does fit into that category. Fundamentally, they haven't done anything wrong," he said.

Bongard didn't provide any detail on what form government help could take although analysts said it could be as a banker of last resort, or might take an equity stake or could ease foreign ownership regulations.

"From our perspective and from our board's perspective we would certainly much rather remain independent and a strong New Zealand-based company and the I think the prime minister was saying the same thing," he said.

Bongard said he doesn't believe government handouts are the right thing to do in normal times "but in times like this...I think strong, decisive unusual action is what's going to get us through."

Gordon said it might be problematic for the company to remain in New Zealand hands given its debt had blown out by over NZ$120 million due to the fall of the New Zealand dollar and its market capitalization had fallen to under NZ$190 million.

Because of its strong intellectual property, Gordon expects a major competitor such as U.S. Whirlpool Corp (WHR), with which F&P has strong ties, to be interested in a stake.

"Those guys will want to protect themselves, so one of those, in my opinion, will step up."

But if such a company buys more than 20%, under New Zealand's Takeover Code, it must launch a full takeover, which may throw into doubt continued local ownership.

On Monday, F&P said it expects normalized group net profit to be NZ$25 million to NZ$30 million in the current fiscal year ending March 31, against NZ$65.5 million a year earlier.

Accompanying the profit warning was a surprise announcement it is reviewing its capital structure and examining alternative sources of capital. Details were sketchy.

Bongard reiterated Tuesday that Fisher & Paykel Appliances' problems are short term and directly linked to the global credit crunch.

-By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; [e-mail]