Westar looking to sell stake in Protection One

Thursday, January 16, 2003

January 16, 2003

TOPEKA, Kan. - In a move aimed at reducing the company’s multi-billion dollar debt, Westar Energy Inc. has announced its intent to divest itself of its stake in Protection One.

The move did not come as a surprise to analysts who have watched Protection One and Westar deal with mounting debt over the past few years.

Analyst Jack Mallon, managing director at Mallon Capital, said the sale makes sense for Westar, “particularly if they get the right price.”

The largest electric utility in Kansas, Westar Energy owns approximately 88 percent of Protection One, and is currently facing a debt of approximately $3.6 billion.

The Kansas Corporation Commission (KCC), which regulates public utilities, and has been critical of Westar’s investment in outside businesses such as Protection One, has put pressure on Westar to divest itself of its interest in Protection One to reduce Westar’s debt.

In late December, the KCC ordered Westar to isolate its regulated utility businesses from its unregulated operations, including Protection One.

According to a Westar spokesperson, the move is designed to help reduce the company’s debt, and is not solely linked to the KCC’s order. Richard Ginsburg, Protection One’s president and chief executive officer said the announcement did not come as a surprise to him.

“Westar is a regulated utility (by the state of Kansas)…and the KCC has been somewhat critical of Westar’s investment in non-regulated businesses, such as Protection One. So, we anticipated this happening,” said Ginsburg.

Ginsburg said that he thinks that the sale could end up being beneficial for Protection One.

“I think Westar’s investment in Protection One was a good investment and (continues to be) a good investment, but we understand that it is a different era now with the regulation of businesses,” he said. “We think it’s probably best for our company to separate and go and be an independent company that does not have a regulated investor. At the end of the day, this will be positive for our company.”

Ginsburg adds he is going to work with Westar to minimize the impact of Westar’s decision on his company.

Westar has not set a timetable for the sale, and the spokesperson adds that the company has not set a price, and it has no potential buyers lined up as of yet.