Aurrigo Regulatory News (AURR)

25 Jul 2006 07:01

Aurora Russia Limited25 July 2006 25 July 2006 Aurora Russia Limited acquires stake in OSG Records Management group ofcompanies Deal marks first investment in Russia following IPO Aurora Russia Limited (the "Company" or "Aurora Russia"), the AIM-quotedinvestment vehicle established to make equity or equity-related investments insmall and mid-sized private companies in Russia, announces that it has invested$9.4m (£5.1m) for a 40.31% stake in Whitebrooks Investments Limited("Whitebrooks"), the holding company of the OSG Records Management group ofcompanies ("OSG RM Group"). OSG RM Group is the market leader in recordsmanagement in Russia, Ukraine, and Kazakhstan. Aurora Russia's stake is subjectto an adjustment mechanism based on the OSG RM Group's 2006 revenues. The Company and OSG RM Group have agreed that an 8% employee stock optionprogramme will be implemented. Therefore Aurora Russia's interest in Whitebrookson a fully diluted basis will be 37.1%. In addition, Aurora Russia will providea short-term facility of $5.0m to assist in funding the general corporate andworking capital needs of the OSG RM Group. The facility will carry an interestrate of 12% p.a. and provide Aurora Russia with an option to convert anyoutstanding amounts into equity on the basis of a pre-determined formula, shouldthe OSG RM Group fail to repay them within 12 months of drawdown. This is the first investment by Aurora Russia since its admission to the AIMmarket in March 2006. The Company is actively pursuing further investmentopportunities in the business and financial services segments in Russia. About OSG RM Group OSG RM Group is the regional leader in records management and providescost-effective total records management, document storage, data security andconfidential data destruction solutions. It is the largest operator in Russia,Ukraine and Kazakhstan, with a presence in Poland, Bulgaria, China and Turkey.The directors of Aurora Russia believe that OSG RM Group, which entered theRussian market in 1998, currently controls an estimated 70%+ of the outsourcedrecords management market. OSG RM Group has built up nationwide coverage inRussia with a customer base diversified across industries and dominated byglobal blue-chip companies. OSG RM Group operates 17 data facilities in totalwith approximately 180 employees and over 1,000 clients. OSG RM Group has demonstrated significant growth since its formation in 1998.Revenues grew at a compound annual growth rate of 58% from 2000 through to 2005.In the year ended 31 December 2005, OSG RM Group achieved a total revenue of$5.0m, an increase of 53% on the previous year, and EBITDA of $1.2m. Itsrevenues for 2006 are estimated to increase to $7.6m. The directors of Aurora Russia believe that OSG RM Group is well positioned tocapitalise on the region's growth in banking, professional services andtelecommunications with the potential for further geographical expansion and amore extensive product offering including more advanced 'value-added' servicessuch as electronic records management. As the Russian economy expands andmatures, the demand for ancillary business services, such as records management,is expected to grow substantially. OSG RM Group's senior management team has extensive experience in the sector. Itcomprises Tim Slesinger (Chief Executive Officer), who founded OSG RM Group inRussia in 1998, Simon Waldron (Chief Financial Officer), Krzysztof Bobrowski(Chief Operating Officer), and Darien Ellul (Director of InternationalDevelopment). As part of Aurora Russia's investment, James Cook will join Whitebrooks' Boardof Directors. Investment details The investment of $9.4m (£5.1m) comprises the acquisition of $6.9m of existingWhitebrooks' shares and a share subscription of $2.5m for new Whitebrooks'shares. In addition, Aurora Russia will provide OSG RM Group with a facility of$5.0m to fund general corporate and working capital needs. This facility isunsecured and shall be available for a period of 24 months from completion ofthe Company's investment in the OSG RM Group. Amounts drawn under the facilitywill be repayable within 12 months and will be liable to interest at an interestrate of 12% per annum. In the event that any amount due under the facility isnot repaid on the date on which such an amount becomes due and payable, thenAurora Russia shall be entitled to convert that amount into shares to be issuedby Whitebrooks, according to a pre-determined conversion formula based upon amultiple of three times historical revenues. Commenting on the acquisition, James Cook and John McRoberts, two Directors ofAurora Russia Limited, said: "OSG RM Group is an established market leader with excellent positioning in thefast growing Russian records management market and the potential for furtherexpansion into neighbouring high growth markets. It is an excellent fit with ourinvestment criteria demonstrating exciting growth potential. We believe that OSGRM Group is uniquely positioned to capitalise on the region's growth in banking,professional services and retail. The additional growth capital we will beproviding will enable OSG RM Group to strengthen its presence in these marketsand secure further market share. Tim Slesinger, Chief Executive Officer OSG RM Group, said: "We are absolutely delighted that Aurora Russia has chosen to invest in ourbusiness and consider this to be a very suitable partnership. We have a hugeamount of respect for the management of Aurora Russia and look forward toworking alongside them. This investment will enable OSG RM Group to expand ourtotal records management product offerings and drive growth." Enquiries Aurora Russia LimitedJames Cook, Moscow +7 495 580 9749John McRoberts, London +44 20 7484 4028Financial Dynamics +44 20 7831 3113Giles SandersonEd Gascoigne-PeesSvetlana Fedyunin Notes to editors: Aurora Russia Aurora Russia floated on the Alternative Investment Market of the London StockExchange on 24 March 2006. The Company has been established to make equity orequity related investments in small and mid-sized private Russian companiesfocused on the financial, business and consumer services sectors where theDirectors of Aurora Russia believe there is potential for growth together withviable exit opportunities within two to four years of making such investments.The Company intends to provide its investee companies with the necessary capitalto continue to expand and develop. Aurora Russia shall provide hands-onoperational support to deliver significant step changes in performance and valuecreation. Aurora Russia will target companies with enterprise values of up toapproximately £100 million and will seek to secure blocking or controllingstakes and board representation. The Company intends generally to take equitystakes of greater than 20% in each portfolio company. It is anticipated thateach equity investment will typically be between £5 million and £25 million. OSG RM Group OSG RM Group provides cost-effective total records management, document storage,data security and confidential data destruction solutions worldwide with newdata facilities opening continually. Established in 1998, the OSG RM Group nowoperates 17 storage facilities and approximately 180 employees and is the numberone provider in Russia, Ukraine and Kazakhstan, with a presence in Poland,Bulgaria, China and Turkey. OSG RM Group currently has over 1,000 clientsranging from small start-ups to world leaders across all market sectors. This information is provided by RNS The company news service from the London Stock Exchange