Osprey deal clinched

JACK RUBINS, a well-known figure in the advertising industry, is injecting his privately owned creative agency, SMS, into Osprey Communications, writes Neil Thapar.

The move, revealed exclusively by the Independent earlier this week, is in effect a reverse takeover of Osprey, which has been struggling with difficult trading conditions and an estimated pounds 4m debt burden.

The deal involves the acquisition of SMS by Osprey, to be financed by the issue of 4.5 million shares and a pounds 500,000 cash payment to Mr Rubins. As a result he will become Osprey's biggest shareholder with a 21 per cent stake and replace John French as chairman and chief executive.

The acquisition is accompanied by the disposal of Osprey's marketing services division to its managers for an inital cash sum of pounds 2m. However, the sale will result in an exceptional charge of pounds 2.1m for Osprey.

The company has also launched a one-for-three rights issue at 25p a share to raise pounds 1.3m. The proceeds will be used to cut borrowings. It is forecasting an interim payout of 0.1p.

SMS was set up in 1988 and its biggest client is BSkyB, which accounts for about 60 per cent of its income. The company made an operating profit before exceptional items of pounds 309,000 for year ended 31 October.

Osprey shares climbed 6.5p to 32.5p. In January they were 7p.