Interface Security Systems Completes $600M Refinancing for New Capital Structure

Interface Security is a portfolio company of SunTX Capital Partners and provides IP-managed physical security and secured managed network services to primarily large, commercial multisite customers.

EARTH CITY, Mo. — Interface Security Systems completed a $600 million refinancing for a new capital structure totaling $125 million from SunTx Capital Partners and Prudential Capital Partners, which is intended to help facilitate strategic growth and expansion.

Interface Security, headquartered here near St. Louis and Plano, Texas, is a provider of monitored, mission-critical managed network, physical security and business intelligence services to large multi-location businesses over a private PCI-compliant Cloud-based network. The company’s clientele include organizations in the retail, hospitality and restaurant industries.

Pursuant to the $600 million refinancing, the company’s existing debt — including a $50 million Capital One revolving credit facility, $230 million senior secured notes due 2018 and $115 million senior contingent cash pay notes due 2018 — has been redeemed in full. PIK senior notes totaling $67 million due in 2019 have been exchanged for new PIK senior notes due in 2023.

The new debt capital structure includes a $290 million senior credit facility consisting of a $230 million Term Loan A and an undrawn $60 million revolving credit facility led by Capital One.  Additionally, Prudential Capital Partners will be providing $100 million of senior subordinated notes.

“With a new capital structure Interface is now ideally positioned to continue capitalizing on opportunities for accelerated growth and expansion,” says Ned N. Fleming, III, founder and managing partner of SunTx Capital Partners. “We are excited to invest additional growth-equity capital into the company and, in particular, to partner with Prudential Capital Partners.”

The recapitalization is a key step forward for the company as it continues to be a leading provider in the retail digital technology transformation with Cloud-based, bundled IP managed security, network and interactive video services, says Michael Shaw, CEO of Interface Security.

“Moving forward now with a stronger balance sheet and improved cash flows, the company will focus on increasing our sales and marketing initiatives, expansion into new vertical markets, investment in new technologies and development of additional managed services that will enable us to provide an even broader range of mission critical cloud-based bundled services to both our existing customers and new clients,” he says.

Imperial Capital acted as financial advisor to Interface; Akin Gump Strauss Hauer & Feld LLP served as legal counsel for Interface. Schiff Hardin served as legal counsel for Prudential Capital Partners.  Buchanan Ingersoll & Rooney PC served as legal counsel for the lenders.  Wilmer Cutler Pickering Hale and Dorr served as legal counsel for the bondholders.

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