ENGINEERING consultancy Cardno (ASX: CDN) has sold its software business XP Solutions for $65 million to private equity firm EQT and has also paid off $134 million in debt, it announced today.
The move comes as the Brisbane-based company continues to restructure in challenging business conditions.
Further, Cardno is still negotiating the fallout from its disappointing purchase of Ecuador-based Caminosca in 2012.
The agreement to pay down debt from $279 million in June to $144 today comes with covenant waivers on any potential further impairment associated with the Caminosca operations and for costs associated with restructuring the company.
Cardno bought Caminosca for around $18 million in 2012, but it was forced to make a $47.6 million write-down on its Ecuador business in 2015.
It is still locked in a legal battle with Caminosca's former owners over alleged misrepresentations made in the sale process and the company has also been implicated in a scandal related to 'questionable payments' made by the Ecuador subsidiary.
Cardno was prolific in the acquisition space for years, but the global slowdown in the mining and resources sector has hurt a number of its businesses. The company has recorded two consecutive full-year losses, $245.1 million in FY15 and $176 million in FY16 largely caused by write-downs in its various businesses.
Compounding the company's troubles has been the resignation of two managing directors in the past 18 months, including Richard Wankmuller in late August.
While the company is moving to improve its position, it says challenges remain in the coming year.
"Although we are very early in the new financial year, the company expects EBITDA prior to abnormal costs, or costs associated with the restructuring of the business and Caminosca, to be of a similar order of magnitude to the reported EBITDA for continuing operations in FY16," it says in a statement today.
The company will release a further update of operational performance at its AGM on 27 October.
Cardno is trading down 0.62 per cent at $0.80 per share early this afternoon.
Get our daily business news
Sign up to our free email news updates.