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Kuala Innovations makes first investment

Kuala Innovations Limited has announced the acquisition of a 4.9% interest in the issued shares of UK incorporated private company The Diabetic Boot Company Limited.

In aggregate, Kuala has acquired 25,978 ordinary shares of The Diabetic Boot Company at a price of £13.37 per share, for total consideration of £347,324, valuing the whole company at £7.05m. Regent Pacific, a Hong Kong listed company, recently subscribed for shares at the same price.

The Consideration payable by the Company is to be satisfied by the issue of 6,946,480 new shares of Kuala to the vendors, each with an implied value of 5p per share. The Consideration Shares will, on issue, rank pari passu with the existing ordinary shares in issue and application will be made for the Consideration Shares to be admitted to trading on AIM. Admission and trading in the Consideration Shares on AIM is expected to commence on or around 10 September 2015.

The Diabetic Boot Company is a private single product medical device company based near Oxford, in the UK, focussed on the treatment of diabetic foot ulcers, which are a comorbidity of diabetes mellitus. The treatment of the ulcers represents a significant commercial opportunity with the current standard of care and alternative therapies lacking efficacy.

The lead product is the PulseFlow(R) which combines intermittent plantar compression with the current standard of care for the treatment of diabetic foot ulcers called offloading. The technology created by the company in relation to the PulseFlow is currently the subject of a number of granted patents in key jurisdictions, with further patents submitted. Intermittent plantar compression as a mechanism of action has been shown in independent clinical studies to produce statistically significant improvements over placebo in wound closure.

PulseFlow is approved for sale in Europe having been granted a CE mark in December 2013 as a Class IIa medical device and they have submitted an FDA 510(k) application for PulseFlow in March 2015. The Diabetic Boot Company has distribution agreements in place in a number of geographies including Australia, Canada, New Zealand, Germany, Austria, Switzerland and Saudi Arabia. They hope to expand this list and is currently negotiating with additional distributors in key markets.

James Mellon is being made Co-Executive Chairman of the Board of Directors.

The interest in the Diabetic Boot Company is being acquired by Kuala Innovations equally from each of Regent Mercantile Holdings Limited and Galloway Limited.  Regent is owned by a trust under which Mr Stephen Dattels, a director of the Company, is a discretionary beneficiary.  In addition, Mr Ian Burns, a director of the Company, is a director of Regent.  Galloway is owned by a trust of which Mr James Mellon, a director of the Company, is a life tenant.

In addition, Regent Pacific is interested in 89,753 shares of the Diabetic Boot Company, representing 17.0% of its  issued shares.  Mr Mellon and Mr Dattels are both interested in the shares of Regent Pacific, and Mr Mellon and Mr Dattels are together Co-Chairmen of Regent Pacific.

Accordingly, the DBC Acquisition constitutes a Related Party Transaction under Rule 13 of the AIM Rules for Companies.  Mr Bryan Smith, the independent director of the Company, confirms that, having consulted with the Company’s Nominated Adviser, that the terms of the DBC Acquisition are fair and reasonable insofar as the Company’s shareholders are concerned.

KUL : Kuala Innovations makes first investment

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