Debt-Ridden Protection One Bought by New York Firm
TOPEKA, Kan. -The New York-based investment firm Quadrangle Group LLC has purchased the majority stake in Protection One Inc. from Westar Energy Corp. for $120 million. As part of the deal, Quadrangle agreed to take up $525 million in debt that Westar had tied up in Pro One as well as purchase a $228 million credit line Westar had extended to the security company.
Pro One’s sale, announced Dec. 23, has been on the horizon for more than a year after Westar was ordered by the Kansas Corporation Commission (KCC) in December 2002 to reduce its $3.6 billion corporate debt and divest its nonutility businesses. Quadrangle will have an 88-percent stake in Pro One, as the remaining shares will continue to be held by minority shareholders.
John Mack III, who with Thomas K. Rankin founded Pro One in 1991 and resigned as CEO in 2000, says that while he has been sad to see the company lose value, he sees Pro One’s new ownership as a “big time” positive. “I’m happy the company is finally free and will be able to regain its place in the marketplace,” says Mack, who after leaving Protection One co-founded USBX Advisory Services and serves as its CEO.
While some still see the near-future downfall of Pro One, security industry financial analyst Jack Mallon says he sees clear sailing ahead for the company after the storm it has weathered.” If they have survived what they’ve gone through, they’re going to be along for a long time with the caveat that the impact of the debt is still an issue,” Mallon says. “But they have certainly gone through the ringer, which is a testament to their current management.”
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