AIG Fund forks out $20 million for 30% in UTI Group

UTI Group, a producer of IT&C and security solutions, of electrical installations and military systems, and investment fund AIG Investment Fund have reached an agreement regarding the sale of a 30% stake in UTI, for 20 million dollars (17 million euros), according to sources close to the transaction. The contract is to be signed today.

Negotiations took about two years, with the two parties seeking to draft a business plan for the next four-five years. UTI worked with law firm Linklaters Miculitii & Asociatii, for the legal issues, and with KPMG Romania for the financial and tax issues. AIG teamed up with the Budapest-based office of law firm White & Case.

After the deal is completed, both UTI”s main shareholder Tiberiu Urdareanu and AIG will cede a stake in the group so that 15% in the company”s shares can be directed to several key-employees.

Following the redistribution process, the company”s main shareholder Tiberiu Urdareanu will be left with some 59.5% in UTI, AIG will hold 25.5%, with the rest of 15% to be owned by about 100 employees of the group.

The money paid by investment fund AIG will be invested, next year, in increasing the efficiency of UTI”s four business segments (security systems and services, IT&C, electrical and mechanical installations, military systems) and in launching new products and services. Furthermore, as of 2007, UTI will also look to purchase companies operating in the same fields as the group.

UTI Group expects turnover worth some 58-60 million euros and net profit in the vicinity of 6 million euros this year, in line with estimates made by the company officials. Next year”s revenues are forecast at 70-72 million euros, with net profit set to reach 9 million euros.

According to previous statements made by company officials, Tiberiu Urdareanu had considered floating UTI on the Bucharest Stock Exchange two or three years ago, but eventually decided to attract an investor into the group”s shareholding structure.

This year, AIG sold its stakes in telecom operator Astral Telecom and in mobile telephony operator Orange Romania.

UTI employees some 800 people, with their number scheduled to go up 12-13 percent next year.

The company will start building a new HQ in Bucharest in 2006, an eleven-storey building located on the site of its old headquarters in Vasile Lascar Street. The old building will be demolished and the entire project entails an investment amounting to 17-18 million euros.

UTI Group has been involved in several highly important projects, such as providing security and IT&C solutions to the Constanta Harbour, modernising the security system from the Cernavoda Nuclear Plant, developing the IT infrastructure of the eProcurement Public Acquisition Electronic System and providing electrical, communication and security solutions to the Henri Coanda international airport. mihai.musatoiu@zf.ro