Interface raises $115m

Installations for new retail customer with 8,000+ locations begin this month
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Wednesday, June 4, 2014

ST. LOUIS—Interface Security Systems, an integrator that offers physical security with managed network solutions in a bundled service, has raised $115 million to fund growth that includes adding an important new retail customer.

“Unlike the $230 million bond that we completed in January, that was substantially a refi, … this latest financing is truly growth capital,” Interface CEO Michael Shaw told Security Systems News on June 2.

Shaw said he could not name the major new customer at this time “other than to say that it’s a national retailer with over 8,000 store locations. We’ll be delivering our bundle of both physical security including video as well as securely managed broadband and TIC network service to all [existing] stores and to all future stores going forward,” he said. “We are starting the deployment here this month in June.”

“We sold our [residential focused] Hawk Security to Amy Kothari [Alarm Capital Alliance], which was a very strategic move in order to narrow our company focus on pursuing national accounts,” Shaw said.

Shaw said the real benefit of its bundled services offering for retailers is that it simplifies things. For example, this new national accounts customer was dealing with multiple service providers, including broadband, and an alarm company, a video surveillance company, multiple providers of telephone lines to the stores “as well as an internal organization that manages these providers,” he said. Interface is able to provide all of those services “that we deliver and we manage. We simplify through our approach and the [end user] has one throat to choke.”

One of Interface’s marquee customers is Dollar General. Interface provides its bundled services to “over 11,000 stores,” Shaw said.

Imperial Capital today was the sole book runner for the financing, which is in the form of a senior contingent cash pay notes offering. “It’s a big new tranche of capital to help finance big new contracts,” John E. Mack III, Imperial Capital EVP and co-head of investment banking, told SSN. “It’s also a bond offering, done at the holding company level, which for various reasons allows for a little more flexibility. It also has the option to pay or accrue interest, and it gives Interface plenty of capital to grow the business,” he explained.
 
Interface is a portfolio company of SunTx Capital Partners. Its parent company is Interface Master Holdings.