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| Company |
Code |
Released |
Type |
Headline |
| Cavalier Corporation Limited |
CAV |
26 Sep, 2007, 13:44 |
ASSET |
Purchase of 70% interest in Norman Ellison Carpets |
| Full Text of Announcement |
The Directors of Cavalier Corporation
("Cavalier") advise that Cavalier has
entered into a conditional agreement to purchase a 70%
interest in Norman Ellison Carpets. The agreement is
subject to various operational conditions being
fulfilled and to clearance by the Commerce Commission.
Auckland-based Norman Ellison Carpets was founded in
1975 by its current majority owner, Warwick Norman.
Set up initially as a carpet distributor, it has since
grown to become one of the few integrated carpet
manufacturers in New Zealand with its own yarn
spinning and carpet manufacturing facilities sited at
Onehunga, Auckland. It is also an importer and a
distributor of nylon carpets through its wholly owned
subsidiary, Carpet Distributors. Norman Ellison
Carpets is well represented on both sides of the
Tasman and it operates two distribution centres - one
based in Auckland and the other in Brisbane.
The proposed transaction will be effected through a
new company set up to acquire the assets and business
of Norman Ellison Carpets. Cavalier has agreed to
subscribe for a 70% shareholding in the new company
whilst the current owners (Warwick Norman and a group
of key employees) will take up the remaining 30%. The
new company will have net operating assets of around
$23 million and paid-up capital of $8 million.
Cavalier will be issuing $5.1 million of Cavalier
shares at market value to the vendors of the business
to finance its 70% shareholding in the new company,
with the balance of $0.5 million coming from
borrowings. Cavalier estimates the share issue to
result in around 1.6 million new shares which
represent an increase of 2.4% on the shares currently
on issue.
The purchase of the Norman Ellison Carpets business
will enable Cavalier to expand its carpet operations
in the New Zealand market, but more particularly in
the Australian market where there will be significant
opportunities for growth through better market and
product representation. At the same time, the
Directors also expect improved earnings through the
synergistic benefits that will arise from the two
businesses.
The intention is for Norman Ellison Carpets to
continue to retain its own identity in the market
place (through continuity in management, sales
representation, sales people and brands) with the
positives from the proposed transaction coming from
synergies in manufacturing and increased market
representation.
In its first full year, the new company is expected to
have a turnover of $60 million and EBITD (earnings
before interest, tax and depreciation) of $6.5
million, with Cavalier sharing in 70% of that.
The effective date for the transaction would depend on
the outcome of the Commerce Commission application.
The Commission aims to make its decisions within eight
weeks, although this process can take longer depending
on its workloads and other factors.
Wayne Chung
Managing Director
26 September 2007
For more information regarding this announcement,
please contact Wayne Chung on 09 277 6000 (during
business hours) or 021 772277. |
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