In a deal that eliminates the possibility of it filing for Chapter 11 bankruptcy protection, security systems provider Protection One has reached an agreement with its lenders and its former parent company that will reduce its debt by nearly $200 million. The move cuts the company’s outstanding debt nearly in half and ends a nine-month process by Protection One’s management to improve its financial standing.

Faced with more than $500 million in debt, Pro One had warned its shareholders in March that it may need to resort to a bankruptcy filing to deal with its financial shortcomings. Protection One President and CEO Richard Ginsburg told Security Sales & Integration that the agreements announced Nov. 15 take bankruptcy out of the realm of possibility and remove the cloud of restructuring that has been hanging over the company.

“That distraction is gone and the employees here are ready to compete and see what we can do. This puts us in a stronger position and allows us to spread our wings,” Ginsburg says. “We’ve had a negative aura around the company. We’re eager to show everyone we’re ready to rock and roll here.”

Under the debt agreements, the company’s majority equity holder and lender – the Quadrangle Group – will reduce the company’s outstanding debt by $120 million in exchange for 800 million shares of Protection One stock. In addition, Westar Energy settles its tax-sharing obligations to Protection One for $73 million.

Westar sold Protection One to Quadrangle of $120 million on Feb. 13.

Ginsburg says the industry should expect to see Protection One get more aggressive in the residential and commercial marketplace. “The industry is still licking its wounds from dealer programs and zero-down sales, but I’m still pretty bullish on the industry,” Ginsburg says. “Companies like us are emerging and getting our act together.”

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