Protection One on positive watch by Fitch, after debt restructuring plan announced

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Saturday, January 1, 2005

NEW YORK - Fitch Ratings has placed Protection One’s ‘CC’ senior unsecured and ‘C’ senior subordinate ratings on Ratings Watch Positive, the company’s first upgrade on its notes in more than one year.

The move follows Protection One’s announcement in November that it has reached an agreement with affiliates of the Quadrangle Group, the company’s largest creditors and its majority equity holders, on a debt restructuring plan that would reduce the company’s total debt by approximately $190 million to roughly $356 million.

Ratings Watch Positive signifies the possibility of an upgrade on the notes by Fitch Ratings. For Protection One, whether that occurs or not depends upon how the debt restructuring plays out.

Nick Nilarp, director of Fitch Ratings, said the length of time the company’s notes are held on watch and what rating it could move to is determined over time.

According to Nilarp, the last time Fitch moved on the company’s ratings was a downgrade in November 2003 - when it was still owned by Westar Energy.

The company was sold to Quadrangle Group in December 2003 for $120 million, but came burdened to the New York-based investment firm with more than $500 million in debt. Under the Westar umbrella, Protection One played an active part in the acquisition craze of the late 1990s.

The company’s debt restructuring is expected to be completed by the end of March 2005.