Apparel maker Hampshire Group has completed the sale of its Honduras-based manufacturing business Rio Garment to a group led by the unit's existing management.

The move, first announced earlier this year, will provide "significant liquidity" into the US firm's operations. At the time, the company said that in addition to the equity purchase price of US$6m, Hampshire will receive the existing accounts receivable and certain other assets of Rio totalling $5m.

Rio designs, sources and manufactures knit tops for men, women and children, which are sold to retailers and distributors, primarily in the United States.

The company described the deal as a “major step forward,” coming after a “very difficult time” that included significant delays caused by the West Coast ports strike and the departure of its CFO, which “adversely affected the company’s liquidity.”

CEO Paul Buxbaum said: “The sale of this business was an integral part of our plan to solidify our balance sheet. With this accomplished we are fully focused on re-establishing a growth trajectory for revenue and profitability through the continued development of our core brands business anchored by our Dockers and James Campbell brands.”

Hampshire acquired Rio in 2011 for $22.9m. However, quality issues and late deliveries from a key fabric supplier forced Hampshire to cut its fourth-quarter sales and earnings outlook earlier this year.