UPDATE 1-Liz Claiborne to sell prAna brand; sees Q1 charge

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Feb 1 (Reuters) - Apparel company Liz Claiborne Inc (LIZ.N: Quote, Profile, Research) said it agreed to sell the prAna brand to a group consiting of prAna's founders and private equity firm Steelpoint Capital Partners for $36.5 million in cash.

The purchase price also consists of a contingent cash payment of up to $4 million, the company said in a statement. The deal is expected to close in the first quarter of 2008.

Based in North San Diego County, California, prAna is a designer, marketer and wholesaler of climbing, yoga and outdoor lifestyle apparel and accessories.

New York-based Liz Claiborne expects to realize net cash proceeds of $18.1 million at closing, after settlement of a contingent earnout payment of $18.4 million to the prAna founders in connection with the brand's acquisition in 2005.

This payment is expected to be recorded as a charge to the company's first-quarter earnings.

In July last year, William McComb, the company's new chief executive, had unveiled a major restructuring plan that included job cuts, exploring strategic options for 16 apparel brands and increasing investments in four others.

On Friday, the company said it had concluded strategic reviews of 13 of the 16 brands and was on track to complete the review of the remaining three brands -- Ellen Tracy , Kensie, and Mac & Jac -- by the end of the first quarter. (Reporting by Shikhar Balwani in Bangalore; Editing by Anil D'Silva)