The sale of Cavalier Corp’s Auckland manufacturing site is not a done deal just yet, after the firm served a settlement notice on Kinleith Land and Infrastructure following its failure to settle the $24.6 million deal by the Nov. 6 deadline.
Shareholders of the carpet manufacturer signed off on the sale and leaseback of the South Auckland facility in September as part of a plan to repay debt and fund a wool-only strategy.
In a statement today, Cavalier said Kinleith defaulted on the agreement and has 12 working days to remedy that.
Kinleith, owned by investment firm Kinleith Continuation, has holdings in real estate, forestry, wood processing and retail financial services businesses.
Its director, David Henry, has close ties to the New Zealand First party and its forestry subsidiary, Future Forest Products, unsuccessfully applied for $15 million in provincial growth funding to pursue commercial forestry business.
Cavalier said it will be “exploring all options, including the legal remedies that are available to it should Kinleith fail to remedy the default within the stipulated timeframe.”
Cavalier chair George Adams said despite the disappointing development, the company remains confident it will be able to sell the Auckland property, “especially with the buoyant property market and the level of interest expressed by other interested parties.”
In a trading update, Cavalier said it had "sufficient headroom" to continue its transformation.
“Given the stronger than anticipated trading, the release of funds from the sell-down of synthetic stocks and the significant reduction in bank debt, the board is comfortable there is sufficient headroom for the company to continue the implementation of its transformational strategy.”
Adams said net debt continued to decrease significantly, from $14.5 million at the end of June to $1.4 million at the end of October, putting the firm in a strong position from which to continue to execute its transformation.
The NZX-listed shares were unchanged at 33 cents at midday.
“While the future economic environment remains uncertain, our near term outlook has improved. Cavalier is ideally placed to meet the growing consumer demand for desirable, high performing, safe and sustainable interior products and we are excited about the opportunities for our company,” Adams said.
Kinleith was unavailable for comment today.