18/12/2008 - 17:34

Costarella Design to be privatised

18/12/2008 - 17:34

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Fashion brand Costarella Design will go back to its private roots after the company that owns it entered into a deal to acquire a liver disease treatment company.

Fashion brand Costarella Design will go back to its private roots after the company that owns it entered into a deal to acquire a liver disease treatment company.

Costarella said it has signed a memorandum of understanding with the Asian Centre for Liver Diseases & Transplantation (ACLT) Inc.

ACLT has entered into a share sale agreement to acquire the Asian Centre for Liver Diseases & Transplantation Pte Ltd, which is 80 per cent owned by Dr Tan Kai Chah while Pamela Anne Jenkins holds the balance.

The purchase consideration for the acquisition will be the issue of shares to Dr Tan and Ms Jenkins worth some $50 million, the company claims.

Following the issue of shares, which will be priced at 1.52 cents each, the issued capital of the company will be consolidated so as to have an issue price of 20 cents each.

The company's shares last traded at three cents before placed in a trading halt.

Currently, Costarella has 52.74 million shares on issue and following consolidation, the company will have 5.27 million issued shares, based on existing shares.

Costeralla has also agreed to undertake a $5 million capital raising which will fund ACLT's expansion plans and provide working capital.

Should the acquisition go ahead and shareholders approve of the deal, Costeralla Design will change its name and solely focus on the ACLT business.

The merged entity will have a total market capitalisation of $72 million, with Dr Tan and Ms Jenkins to hold around 91 per cent of the issued capital.

Non-executive director Sam Di-Giacomo told WA Business News the decision to enter the deal was prompted by several factors.

"Given the economic climate and given the share price performance of the company and the ability to raise future capital, it was in the best interests of all stakeholders to deliver a profitable business

"The fashion brand has not been profitable since listing, but the liver treatment business is highly profitable."

He added that the company had come across ACLT through Asian contacts, with three of the board members having backgrounds in the healthcare sector.

Mr D-Giacomo is the founder of Resonance Health.

Should the acquisition deal go through, the Costarella brand business will be privatised, which will allow it to focus on its core business of high end luxury fashion and the expansion of related lines.

"Our global expansion strategy is still in place with a shift in focus to the Asian and Middle Eastern markets following the downturn in the US economy," Costarella managing director Aurelio Costarella said in a statement.

"We see the privatisation of the company as a positive step for the Costarella brands as it removes all the ASX listed company overheads, resulting in significant cost savings and increased bottom line performance.

"As Creative Director there will no longer be the need to deal with corporate and regulatory issues, resulting in greater creative input to continue to design and develop the brands and products in the international markets."

He added that private equity and specialist fashion investor groups internationally prefer a private structure.

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