Rmg In Deal To Acquire Large Collection Agency

MEDIA RELEASE

For immediate release Friday, 21 July 2000

RMG IN DEAL TO ACQUIRE AUSTRALIA’S LARGEST COMMERCIAL COLLECTION AGENCY

RMG Limited (NZSE: RMG) has consolidated its position as the region’s largest and fastest growing receivables management company with the announcement today of the acquisition of Australia’s largest collector of business to business debt, Credit Solutions Australia Pty Ltd, with revenues of $A10 ($NZ12.6) million.

The acquisition, which involves approximately $A9 ($NZ11.4) million in cash and shares, is expected to be settled at the end of August, subject to the completion of due diligence investigations. Shares will be issued to the vendors of Credit Solutions at a 6 per cent discount on the average price in the ten days preceding the announcement, and 90 per cent of these shares will be subject to escrow until 20 June, 2001.

The acquisition will see RMG Limited’s projected revenue exceed $A70 ($NZ88.8) million for the year to 30 June 2001. The transaction will also increase RMG’s market share to about 25 per cent of the Australian collections market.

Headquartered in Sydney, Credit Solutions has a current staff of about 100, with offices in each mainland State in Australia. The merging of the various sections of the business into the RMG group is expected to be completed by the end of December, 2000.

RMG’s Chief Executive, Mr Paul Cooney, said that the purchase would add significantly to RMG’s expertise and capacity in the area of commercial collections as well as delivering a number of excellent long term contracts with some of Australia’s leading businesses.

“This acquisition will provide RMG with a dominant position in the commercial collections market in Australia, complementing the businesses’ leadership in the consumer and retail collections markets,” Mr Cooney said.

“The acquisition will provide us with an opportunity to offer commercial clients access to the recently acquired factoring services and the expanding range of commercial reporting products available through our Creditnet International division.

“Credit Solutions also have a strategic partnership with national law firm Murrays Lawyers, who provide a team of 12 specialist solicitors working exclusively on behalf of the company and its clients.

“The access to legal services and expertise that this acquisition will bring will further enhance the range of services available to RMG’s clients.

“The additional office space in Baulkham Hills, west of Sydney, will also satisfy our need to expand our call centre operations, a need that has emerged since the merger and as a result of new contracts we have won.

“Since the merger, RMG has won a major contract with one of Australia’s leading finance companies, as well as an increased volume of work from the major telecommunications providers, all of whom are now RMG clients.”

Mr Cooney said Credit Solutions had enjoyed strong growth under its current management team, who would be retained to assist in further growing RMG’s commercial business services division, particularly its legal services activities.

“Recent acquisitions made by RMG have delivered us a strong strategic footing in the collection and analysis of business information, factoring and investigations,” he said.

“These acquisitions, combined with the strengths and skills of the companies that initially merged to form the group, mean that RMG is able to offer an integrated range of receivables, debt management and credit reporting services under a single umbrella.

“This ability to offer a ‘one-stop-shop’ is already causing a number of users of alternative providers to rethink the way they manage their collections and credit functions.

“We also plan to capitalise on the opportunities that recent acquisitions have given us by developing strategic alliances with key customers.”

Mr Cooney said the consolidation of the various businesses in the group was proceeding well with rationalisation of resources and sites expected to be completed by the end of September 2000, as originally forecast.

“We had factored in the need for some reduction in staff numbers at the time of the merger, but we are in fact finding that we now need to take on more staff in order to cope with the increase in business and new contracts won since the merger,” he said.

RMG recently announced the acquisition of the prominent West Australian-based debt recovery agency Laurens & Munns, New Zealand-based Kiwi Factors, Northern Receivables and Southern Receivables Ltd and Melbourne-based Total Credit Management Services Pty Ltd, for a total consideration of $A4.8 (NZ$ 6) million.

Shortly after listing the company also acquired a 25% stake in business data intelligence company, Atlantis Marketing Limited.

RMG Limited recently completed a successful $A25 ($NZ31) million capital raising, listing on the Australian and New Zealand stock exchanges last month (June 2000).

RMG has a staff of over 650, with 28 offices in Australia, New Zealand and Asia and projected revenue now in excess of $A70 ($NZ88) million per annum.

The company was initially formed by the merger of a number of receivables management companies in Australia and New Zealand. Services provided by RMG include traditional debt recovery and receivables management, credit information and database management services, debt purchasing, factoring, ledger management and complete outsourcing of a company’s receivables function through leading edge internet-enabled technology.

- Ends –

For media enquiries, please contact:
 Peter Mahon, Royce Communications
Tel: +61 (0)3 9639 2300 Mob: +61 (0)418 351 754 Email: pjm@royce.com.au
 Paul Cooney, RMG Limited
Tel: +61 (0)3 9205 0711 Mob: +61 (0)419 561 161 Email: pjcooney@ozemail.com.au
 Michael Bartrom, Botica Conroy & Associates
Tel: +64 9 303 3862 Mob: +64 (0)21 403 503 Email: michaelb@bca.co.nz

© Scoop Media