Investor interest in Cavalier's Whanganui yarn spinning and felting plant

Cavalier says its Whanganui yarn spinning plant remains an important part of the company's future. Photo / Bevan Conley

Cavalier's yarn spinning plant at Castlecliff has attracted interest from potential buyers.

The plant, with buildings in Leamington St and Beaumaris Ave, is included in the company's national property portfolio along with properties in Napier and Auckland. The properties went on the market as a sale and leaseback offering with the aim of generating capital for the carpet manufacturer's "wool and natural fibre only" strategy. Cavalier Bremworth has committed to long-term leases under new ownership.

Chief executive Paul Alston said this week the sale process remained on track and there had been interest in all three industrial sites.

Offers for each property would be considered separately by the board, rather than as one portfolio, and shareholder approval will be needed for any sale process, Alston said.

In June, he told the Whanganui Chronicle that the Whanganui plant "is a real part of our future", with the felted wool plant an important part of the company's operations and that there were no plans to reduce staff numbers.

Cavalier Corp said a positive trading period in June and cost controls helped it reduce bank debt to historical lows of $14.5 million as it shifts to the all-natural fibres strategy.

However, the financial benefits of the new strategy are not expected to flow through until at least 2023.

In a market update, the company said stock levels had decreased "significantly" to about $35 million, on the back of trading through June that was "stronger than anticipated", particularly in wool sales.

That bounce followed a year-on-year reduction in volumes through the prior three months as a result of Covid-19 trading impacts.

Alston said sales in New Zealand had rebounded strongly and there had been less than expected impact in the Australian market - which accounts for about 40 per cent of volumes - although sales for July were now being impacted by the recent renewal of lockdown in the state of Victoria.

George Adams, who this week took over as chairman from Alan Clarke, who stepped down, has formally unveiled the firm's transformation strategy, which will see it transition completely away from synthetic products and into wool and natural fibres.

He said the financial benefits of the change are expected to be seen with a return to profitable growth from 2023 onwards, "following an initial 12 to 24 months of investment as the business is reset and the new strategy is executed".

Alston said the company still had "considerable" synthetic products and would now start discussions with retailers about the changeover.

The company's transformation strategy indicates that although the focus will initially be on woollen carpets and rugs, the firm will also be seeking out "partnerships where it can leverage its design and manufacturing capabilities and the value of the Cavalier Bremworth brand to create new product categories".

To that end it has been working with NZ Merino and other advisers and industry experts.