Central Security becomes force in the South

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Tuesday, April 1, 2003

TULSA, Okla. - An alarm company here backed by a group of equity partners is quietly growing into a force in the southern central region of the United States and is shopping around for a second round of financial support that will sustain operational growth for the next few years.

Central Security Group, which received a commitment from Denver-based Stolberg Equity Partners for more than $45 million in late 2001, is now looking for mezzanine funding to maintain growth for about the next two years, according to Mark Wilson, Central Security Group’s chief executive officer.

“That funding will be an additional piece on our permanent capital structure and help us to maintain our financing for another two years,” Wilson said.

Since its funding infusion in late 2001, CSG has grown its dealer program to about 70 dealers, which are primarily located in Oklahoma, Texas, Kansas, Missouri and Tennessee and represent about 60 percent of CSG’s development over the past few years. Wilson said recent publicized trouble within ADT’s Authorized Dealer program as well as the decision by Leasecomm to exit the security market has resulted in an uptick of business for his program, but for now, he is focusing the business on a more regional basis. The company is monitoring about 33,000 accounts from its UL-listed central station.

“We turn a lot of people away because they are not in an appropriate geography for us,” Wilson said. “Our objective is to be a strong regional player, with any national aspirations long in the future.”

Part of CSG’s success, according to Ted Stolberg, senior partner at Stolberg Equity Partners, is that expansion in CSG’s market occurs only after waiting for the buildup of the customer base. right now, but we’ve reached the economies of scale.”