Cavalier to trim debt by $6.5 mln from Ontera asset sale

Cavalier to trim debt by $6.5 mln from Ontera asset sale

By Paul McBeth

Aug. 27 (BusinessDesk) - Cavalier Corp, which is restructuring its business to revive its earnings, expects to cut debt by $6.5 million from the sale of its Ontera Modular Carpets unit.

The Auckland-based company flagged the sale to Australia's Milliken & Co earlier this month, and anticipates the deal will settle in one or two weeks, it said today. The deal is conditional on key Ontera employees accepting jobs with Milliken and the transfer of certain contracts and leases to the Australian company.

If the sale goes ahead, Cavalier said it's expected to release about $6.5 million, which will go towards the company's debt reduction programme.

Earlier this month, Cavalier said it had already lowered bank debt by $6 million, and is looking at asset sales, job cuts and outsourcing to try and lift profit.

As at Dec. 31, Cavalier's net debt was at $59.1 million, and the debt-to-equity ratio stood at 39 percent, a level it called "too high".

The shares last traded at 41 cents, and have dropped 33 percent this year.

(BusinessDesk)

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