Firm Plans to Buy Big Stake in Aurora Electronics Inc.

Aurora Electronics Inc. said the investment firm Welsh, Carson, Anderson & Stowe will take a majority stake in the company as part of a recapitalization plan.

Aurora, a computer products recycler and re-conditioner, said Welsh Carson could end up holding as much as a 64% stake in Aurora and will select two representatives to the Irvine company’s seven-member board of directors. No management changes are planned.

Welsh Carson affiliates will buy from $35 million to $40 million of Aurora convertible stock and $10 million in subordinated debt. The preferred stock will be convertible at $2.125 a share. Aurora is offering to buy back from investors up to 6.5 million common shares at a price of $2.875 a share.

The tender offer is conditioned, among other things, on at least 2 million shares tendered, and the availability of funds under a new bank credit line. Aurora plans to use proceeds of the Welsh Carson investment to repay some debt and for general corporate purposes. The transactions are expected to close by the end of March.