Cavalier to Acquire Norman Ellison Carpets

Wellington, New Zealand, September 26, 2007--Carpet maker Cavalier Corp. plans to acquire a majority stake in Auckland-based Norman Ellison Carpets, pending approval by the Commerce Commission, according to the National Business Review.

A new company will be set up to absorb the assets and business of Norman Ellison Carpets, with Cavalier taking a 70% stake, and Warwick Norman and a group of employees taking the remaining 30%.

The new company will have net operating assets of around $23 million and paid-up capital of $8 million.

Cavalier says it will issue $5.1 million of Cavalier shares at market value to the vendors of the business to finance its shareholding in the new company, with the remaining $0.5 million coming from borrowings.

The new company is expected to have a turnover of $60 million and EBITD (earnings before interest, tax and depreciation) of $6.5 million.

Cavalier says that it expects the acquisition to provide it with expansion opportunities in both the New Zealand and Australian markets.

The company says the addition of Norman Ellison will provide "significant opportunities for growth through better market and product representation".

Norman Ellison carpets will continue to have a separate identity in the market place.