28 March 2017

Statement by AURELIUS Equity Opportunities SE & Co. KGaA on the short attack by Gotham City and outlook on the development of the business

- Allegations of short-seller Gotham unfounded and distorting reality

- Share buy-back stepped-up: EUR 50m immediately, additionally EUR 160m as of June 21, 2017

A. Executive summary


1. The report published today by Gotham City primarily consists of the manipulation of facts known and already published by AURELIUS, which have been presented intentionally in a misleading fashion and with false claims, presumptions and assertions to deliberately distort the situation in order to cause damage for the shareholders of AURELIUS in its own economic interest (short position).

2. The conclusions drawn by Gotham City Research are substantially incorrect. At no time has Gotham City Research attempted to make contact with AURELIUS, let alone held a telephone conversation or personal conversation with AURELIUS.

3. Gotham City Research claims to hold a significant short position in AURELIUS. Gotham City Research therefore has a fundamental interest in damaging the reputation of AURELIUS by making false assertions and drawing incorrect conclusions in order to manipulate AURELIUS's share price and make significant speculative gains to the detriment of our shareholders when prices fall substantially.

B. Corrective statement

Below, we correct the main incorrect claims made by Gotham City Research:

Re Arques
It is true that Dirk Markus worked for Arques until of the end of 2004. He has been responsible for the operational turnaround of portfolio companies. The disappointing development of Arques that started in 2008 is due to bad deals done in 2006 and 2007 rather than the business model in general. Achieving negative goodwill upon the acquisition of companies is an intrinsic component of the business model and AURELIUS has always been very transparent in disclosing and explaining it.

Re Contingent liabilities
Contingent liabilities are not overstated. Guarantees given to buyers of businesses are part of normal M&A transactions and materialize only in exceptional cases. The example of Wellman cited in the report demonstrates this well. The presumed "risk" at Wellman mentioned in the report never materialized and the last guarantee tranche expired in Nov 2016.

Re Insolvencies
AURELIUS has since 2006 acquired almost 80 companies all of which were in a special situation. While AURELIUS was able to restructure most of them in some cases insolvencies could not be avoided, especially when insolvency regime tools such as ESUG (in Germany) and pre-pack (in the UK) were used to actively safe a company.

Re Net Asset Value
NAV is a model and as such always subject to assumptions. With regard to most of the exits we had since publishing the NAV the purchase price was always close to NAV. Discount factors used are published quarterly and influenced by interest rate changes. As such it is not surprising that they are lower today then a few years ago.

Re Auditor
AURELIUS has been audited by Warth & Klein Grant Thornton since 2010. While not a member of the big four, Grant Thornton is among the top ten auditing companies in the world with a well reputed network and presence in 130 countries.

Re Why not an unqualified audit?

For more than ten years, the audit has led to no reservations; the audit opinion has only been qualified with regard to the disclosure of individual purchase prices paid in acquisitions under IFRS 3 and 8. We strongly believe that disclosing purchases prices would have a negative competitive impact in comparison to non-listed competitors and therefore have never done so.

Re Is Dirk Markus CEO and CFO in one person?
Dirk Markus is CEO of AURELIUS and lives in London because he is in charge of the international portfolio of Aurelius as well as Investor Relations. Steffen Schiefer is CFO of AURELIUS and has been so successfully since 2012.

Re Litigation
Litigation is part of normal live in a corporation in our size and in restructuring situations can sometimes be contentious. However the number of lawsuits is in line with a company of our size, total cash out for lawsuits over the last ten years has been a single-digit million EUR-amount and AURELIUS does not expect this to change materially in the future.

Over the coming days, we will issue a more comprehensive rebuttal of the allegations.
Further, the company is evaluating possible damage claims with regard to a liability for unlawful acts, the notification of BaFin and the filing of a criminal complaint against the responsible individuals with the hedge funds Gotham City for market manipulation.

Share buy-back stepped-up: EUR 50m immediately, additionally EUR 160m as of June 21, 2017

AURELIUS will immediately set-up another share buy-back program in the amount of EUR 50m and will cancel the shares already bought by the company during the current buy-back programme. In addition, the company will propose to the Annual General Meeting on June 21, 2017 to authorize the acquisition of up to 10% of the Company's share capital, equaling approximately EUR 160m based on the current share price.

Positive Outlook

AURELIUS sees a strong exit pipeline and interest in its subsidiaries. AURELIUS expects to successfully exit two to three sizeable companies over the next few months.

With the acquisition of Office Depot and WEX, AURELIUS had a good start to fiscal year 2017. Group revenues and total group EBITDA are expected to increase further.

AURELIUS will continue to position itself as preferred partner in complex pan-European corporate spin-offs. AURELIUS expects a minimum of 6 acquisitions in 2017.

AURELIUS will continue a sustainable dividend policy and share buy-back program.

Conference Call on full-year results on May 29, 2017

AURELIUS Equity Opportunities SE & Co. KGaA will publish its full-year results 2016 on March 29, 2017 at around 11am CET. A telephone conference with the AURELIUS Executive Board will be held at 2pm CET on Wednesday, March 29, 2017 in English for interested investors and journalists. Please send an email to investor@aureliusinvest.de to register.

March 28, 2017

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