Argyle Security recapitalizes with $10.45M

SSN Staff  - 
Tuesday, December 29, 2009

SAN ANTONIO—Argyle Security executives say their balance sheet has been strengthened thanks to a $10.45 M investment by MML Capital Partners, a $1.7 billion investment firm, and Argyle’s largest stockholder.

The investment repays “a significant portion of our indebtedness, including the portion of our subordinated debt with the highest interest rate,” said Bob Marbut, Argyle CEO, in a statement. “In addition, our on-going financial covenant requirements have been improved through amendments to our loan agreements,” he added.

Argyles’ board of directors approved the recapitalization on Dec. 14.

The investment includes $8 million of convertible subordinated bridge and $2.45 million of convertible subordinated promissory notes. Proceeds from the bridge notes will be used to repay $3 million of the company’s senior debt facility and $5 million of the company's subordinated debt. Proceeds from the convertible notes will be used to fund transaction expenses, working capital and general corporate expenses.

As part of the refinancing, the company's senior and subordinated debt facilities’ financial covenants have been amended, certain amortization payments have been deferred and total interest costs have decreased, a company statement reported.

The company expects the bridge notes will be refinanced by a rights offering to shareholders to purchase shares of common stock. Any portion of the bridge notes that are not refinanced will automatically be converted into the company's common stock. The rights offering is expected to be completed in the first half of 2010.

Argyle president and COO Sam Youngblood said in a statement the investment “sends a clear message, especially to our customers, that we intend to maintain our position as an industry leader. While recognizing the challenging environment, we are determined to provide the exceptional service and project management expected by our customers.”

MML Capital Partners has offices in London, Paris, Frankfurt and Stamford, Conn.