Voxcom moves back into the public spotlight
EDMONTON, Alberta--One year after taking its shares off Canada's TSX Exchange, security provider Voxcom, through the Voxcom Income Fund, completed its initial public offering in May.
The offering consisted of 5.75 million units at 10 CAD ($7.96) per share and added up to gross proceeds of $45.8 million. The fund used the proceeds of the offering to acquire all the common shares of Voxcom and to repay a portion of the company's existing credit facilities. The company now trades as a trust on the TSX.
Brad Sparrow, president and chief executive officer of the company, said the move to list the business as an income trust is a natural fit for the company.
"It provides us with a stable, long term source of capital at a very reasonable and predictable cost," Sparrow said. "Income trusts are typically for companies with very stable cash flow and that describes our business."
The company also has access to more capital through the income trust--it accounts for a market capital of $67.7 million as a trust as compared to $4 million to $4.8 million market cap in a traditional public arena.
Jack Mallon, a security industry analyst and founder of Mallon Associates, said this public avenue is increasingly popular.
"It seems to me that this income trust model is taking off in Canada with some success not only in the alarm industry but as well as in retail and other industries," Mallon said.
He said the idea lends itself to the alarm industry because of the recurring revenue stream and the cash flow that the alarm industry generates.
"That is apparently the rational behind Voxcom going that route," Mallon said. "Some of the lenders of the company were able to convert their debt to trust to pay amounts loaned and unit holders get paid by the resulting entity."
Another security company in Canada that has taken the route of an income fund is full-service security provider Microtec, a company that has been operating under Canada's version of bankruptcy protection since 2004.
Last year, Sparrow noted that Voxcom returned to a private status due to the high cost and risk associated with being public. Unlike traditional public avenues, income trust investors look for long-term growth opportunities instead of seeking immediate growth numbers.
"People take a long term view in this market and we are very excited to grow the business going forward," he said.
According to Sparrow, Voxcom will look to future acquisitions for growth. The company completed its largest acquisition to date when it acquired the Alberta operations of Stealth Alarms in January.
"Consolidation will continue in monitoring companies," Sparrow said, "and we believe we will play a part in that."