Pro One gets a chance to focus on its core business
LAWRENCE, Kan.--Protection One announced the successful closing of a new $275 million credit facility, which effectively brings an end to another part of the company's restructuring process.
The new facility, from a syndicate of lenders led by Bear, Stearns & Co. and Lehman Brothers, consists of a $25 million revolving credit facility and a $250 million term loan. Borrowings under the term loan were used to fund the payoff of the company's outstanding 7-3/8 percent senior notes, which were originally due in August 2005, while the revolving credit facility will be used for lines of credit and general corporate expenses.
Richard Ginsburg, president and chief executive officer of Protection One, said this was the final step in the company's restructuring process, which the company has been working toward since Westar Energy sold its interest in Protection One to the Quadrangle Group in early 2004.
"A lot of people look at the company and see that we have made a lot of improvements," Ginsburg said. "Now, the company does not have any looming financial obligations."
Although the company still accounts for $360 million in debt, Ginsburg said the number is comparable with competitors.
"The company has very reasonable debt for its size," he said. "First of all, it's $290 million less than we had a year ago and the company is a substantial size."
Ginsburg also stated that Protection One's financial ratios are comparable, and in some cases better, than its peers.
"We are on a much more level playing field with our competitors now," he said.
Protection One has been battling a debt situation for the past four years, since the company accumulated almost $1 billion in debt during its years of under Westar's ownership. After an 88-percent interest in the company was sold to Quadrangle, a private equity firm based in New York, the company's debt fell to $547 million. Quadrangle's ownership percentage increased to 97 percent in February, when it agreed to exchange $120 million in debt for 16 million shares of stock in the company.
Ginsburg said officials at the company have been "doing a victory lap" since the announcement of the completed restructuring process. Focusing on the debt situation kept the company out of bankruptcy.
For now, it's all about getting back to work and now Protection One has more options in terms of where it would like its business to turn.
"We have the ability to pay down our debt that we have remaining," Ginsburg said. "And we can grow modestly or we can grow faster, but the company has lot more options than it did before."