AMERICAN FORK, Utah—Platinum Protection took a fairly unusual step July 6, holding a public auction here at its headquarters to sell a 17-percent ownership stake in the company.

Why’d they do this? It wasn’t the company’s first choice, but it decided to go this route, executives said, because it was unable, through other means, to settle a dispute with one of the company’s original founders who owned that 17-percent stake, and who now works for a direct competitor.

Management Masters, which is owned by the Jacobson family—several of whom are already investors in Platinum Protection—bought the 17-percent stake with a $2 million credit bid.

“It was a difficult action, but it had to be taken, and the good news is that Platinum is now able to go forward stronger than ever,” said Andrew Kindfuller, CEO of Platinum Protection.

So what exactly happened? “One of the six original founders of the company [Jeremy Pixton], who now works for a direct competitor [Pinnacle Security], had previously pledged ownership interest of his 17-percent interest in Platinum as collateral for a $12 million note,” Kindfuller explained. Management Masters, run by the Jacobson family, is the holder of that $12 million note, and according to Kindfuller “had tried extensively to negotiate a path forward with that founder but was unable to,” he said.

“Based on excellent legal advice,” he continued, “we held a very public sale of that collateral, everything was done 100 percent according to the Uniform Commercial Code.”

Management Masters called the note due, and when Pixton did not repay the $12 million, Management Masters held a public auction to sell Pixton’s 17-percent equity stake. Management Masters then purchased the stake with a credit bid. No money is actually exchanged, but Pixton no longer has equity in the company.

Jennifer Holloway, whose Holloway Security Services, provides consulting services to the security industry and specializes in acquisitions, financing, due diligence, and asset preparation, said this was an unusual, but understandable, transaction.

“The lender is considered the ‘secured party’ if the borrower has granted the lender a security interest in collateral to secure the loan,” she said. “If the lender is a secured party they can call the entire loan due and payable in full or take possession of part or all of the collateral which secures the loan in order to satisfy the debt. Upon an event of default, the lender typically has the discretion to choose the most appropriate remedy, while providing the borrower proper notice and allowing the borrower the opportunity to ‘cure’ the default.”

Pixton did not respond to Security Systems News’ requests for comments on this story.

Since its founding, Platinum Protection has been owned by the six founders—Pixton, Keith Dyer, Derrick Shutz, Jared Hallows, Jacob Pruitt and Chance Allred—and the Jacobson family. Kindfuller did not disclose the individuals’ percentage of ownership. The purchase enlarges the Jacobson’s ownership stake by 17 percent, something Kindfuller characterized as a “positive public statement of [the Jacobson family’s] commitment to Plantinum and to our successful future.”

The five remaining founders are all actively involved in the day-to-day operations of the company, Kindfuller noted.

The auction clears the way for Platinum to move forward with its business plan, Kindfuller said. “The board of Platinum has approved a very aggressive five-year plan for the company. In order to move forward with the plan we needed to make sure we had the correct structure in place to be successful,” he said. “Platinum has money in the bank; we’re actively working on recruiting for the 2011 season and we’re finishing up a very successful summer.”

Comments

Mike says: (4 weeks ago) August 11th, 2010 - 02:08 am

I heard that all of Platinum's programmers have quit in the past 2 weeks to work for other companies, including the department head (Andres). I hear one of them (Todd) was supposedly in charge of payroll programming. Hmmm.....I wonder why he would quit? It's not like he has inside knowledge does he?

Pinnacle says: (4 weeks ago) August 06th, 2010 - 05:16 am

Bring yourself to Pinnacle and you will never regret it. In Texas we run things year round. If you can beat my sales I'll put your name on my office door. Yes a real office door. Upfront money for good clean accounts. I'm loving how Pinnacle is cleaning up the industry. Jeffturner@pinnsec.com. Work for the alarm company and cut out the dealer program!!

Rochelle says: (6 weeks ago) July 28th, 2010 - 12:13 am

I can't believe the article says they tried "reasonable" negotiations with Pixton but couldn't come to an agreement. I have it on good authority that Pixton just asked to be able to walk away. I can't imagine what better deal the Jacobsen's would want then to not pay as long as they didn't take legal action. This industry is filled with vile people, all the while attending church on Sunday acting like being "Christ Like" doesn't have anything to do with business.

John says: (6 weeks ago) July 22nd, 2010 - 02:14 am

I agree with the previous. I worked there for two summers and know many of the employees that left on both the sales and corporate, and they were the best they had. The thing that blows my mind is it's like they are daring themselves to outdo every stupid move made so far. The rest of the employees on the business side probably know they couldn't make it outside that place and have no choice. As for the investors comment, I hope it works out for the sake of the rest of their good rep

Another one fired says: (7 weeks ago) July 21st, 2010 - 02:19 am

Now they fired another owner. Derrick Schutz. They are dropping like flies over there at Platinum. Either your pushed of the ship or you jump off on your own. Either way looks like it is going down and the only ones who can't see it are the captains. Hear they are looking for investors. This is worse than the deadliest catch.

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