Westar Looks Into Selling Pro One to Reduce $3.6 Billion in Debt
Westar Energy Inc., the electric utilities company that owns 88 percent of Protection One Inc., said Jan. 13 that it was exploring ways to sell its stake in the troubled monitored-security subsidiary.
This comes under strong pressure from the Kansas Corporation Commission to reduce Westar’s $3.6 billion corporate debt, the majority of it incurred in building Protection One from a Southern California regional company into a security industry giant with more than 1 million customers. Protection One’s losses contributed significantly to Westar’s high corporate debt, which, in turn, depressed Westar’s credit rating and increased borrowing costs.
Protection One CEO Richard Ginsburg said he was not surprised that Westar is planning to sell, given the pressure from regulators and others. But he said things will continue as usual for Protection One’s employees and customers.
A sale, he said, may not mean a loss of jobs in Wichita, Kan., where Pro One employs about 650 people. “The infrastructure we’re building in Wichita is important to our company,” Ginsburg told The Wichita Eagle. “We have a lot of customers to support.” However, he acknowledged that jobs could be cut if Pro One is purchased by another alarm company that has similar facilities.
According to the article, Protection One has a history of losses and selling it may not be profitable for Westar. But even selling it at a loss could benefit the electric company.
Ginsburg said the biggest issue in separating Protection One from Westar will be replacing a $280 million line of credit that Westar had extended to the security company. Pro One has borrowed about $215.5 million of that so far, according to a company filing with the commission.
But independence from Westar might help Protection One to focus more on its own business, Ginsburg said. “We’ve been spending a lot of time dealing with issues related to our majority owner,” he said.
Regulators and consumer advocates say reducing Westar’s debt is the key to preventing future electric rate increases for its 647,000 customers in Kansas.
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