COMPANY NZX ANNOUNCEMENT
10 October 2006
Nelson diagnostic sold as going concern to medlab south
Abano Healthcare Group, has today announced the sale of 100 percent of the shares in its Nelson pathology business, Nelson Diagnostic Laboratory Limited, to Medlab South, for $375,000 with settlement effective immediately.
The decision to sell the shares was made following the previously announced Nelson Marlborough DHB decision to award the region’s hospital and community pathology contracts to Medlab South.
Managing director of Abano, Mr Alan Clarke, said: “Although we still hold concerns regarding the tender process undertaken by Nelson Marlborough DHB (NMDHB), we recognise that any appeal process or legal recourse path could be costly, distracting and protracted. We are therefore pleased to have reached a commercially sound agreement with Medlab South that provides certainty for our Nelson staff and offers a clean and financially attractive outcome for Abano.”
Medlab South will take over the remaining two months of the existing contact held by Nelson Diagnostic.
As previously disclosed, Nelson Diagnostic was not a large operation in Abano’s portfolio. Annualised revenues were $3.3 million and it contributed around $0.4 million of operational Earnings Before Interest Tax Depreciation and Amortisation (EBITDA). The business had net assets of $0.5 million.
The shares in the business were sold to Medlab South for $375,000. As previously advised, redundancy costs were estimated at $500,000, however, with this sale, Medlab South will assume responsibility for any transition and redundancy costs.