Following on from the announcement made on August 3, Cavalier Corporation (NZX: CAV) has said that a conditional asset sale and purchase agreement has been entered into by Ontera (a wholly owned subsidiary of Cavalier Corporation) with a Milliken subsidiary.

Settlement, which is conditional upon selected key employees of Ontera accepting employment with Milliken and the transfer of key contracts and leases to Milliken, is expected to occur within one to two weeks.

Cavalier, 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.

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 December 31, Cavalier’s net debt was at $59.1 million, and its debt-to-equity ratio stood at 39 per cent, a level it called “too high”.

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