LAWRENCE, Kan., March 14 /PRNewswire-FirstCall/ -- Protection One, Inc. , one of the leading providers of monitored security services to homes and businesses across the United States, announced today that its operating subsidiary, Protection One Alarm Monitoring, Inc. (the "Company"), has successfully completed the closing of a new $110.3 million senior unsecured term loan from a syndicate of lenders led by Highfields Capital Management and Arlon Group. Quadrangle Group and Monarch Alternative Capital, the Company's largest shareholders, are also participants in the facility.
Borrowings under the new five-year term loan will be used to fund the redemption of all of the Company's outstanding 8 1/8% Senior Subordinated Notes due 2009. The Company intends to utilize its cash balance, which was approximately $41 million at the end of 2007, to fund debt issuance and redemption costs of approximately $7 million.
The new instrument carries an interest rate of Prime + 11.5% and can be retired at par after one year. Principal is due at maturity. Based on current interest rate forecasts, the Company expects that its cash interest expense in 2008 will not be significantly higher than its cash interest expense in 2007 (on a pro forma basis assuming the IASG merger occurred on January 1, 2007). The earliest scheduled maturity of the Company's three credit instruments is now November 2011.
Commenting on the transaction, Richard Ginsburg, president and CEO, said, "We are pleased to have completed this financing despite extremely difficult and harsh financial market conditions. This transaction substantially enhances the company's financial flexibility and allows the company to continue its focus on building operating momentum through market segmentation, technology-differentiated security systems and strategic acquisitions. With the commitments from our new partners, Highfields Capital Management and Arlon Group, we were able to push out a critical maturity, while retaining the ability to refinance on an opportunistic basis with limited redemption costs."
Matthew B. Botein, Managing Director at Highfields Capital Management, said, "Richard Ginsburg and his team are successfully executing a plan to further enhance recognition of the Protection One brand and expand the Company's customer base in the growing electronic security market. Our support of the Company is consistent with Highfields' strategy of making long-term investments in companies with solid fundamentals and the ability to deliver strong, sustainable performance."
Bear, Stearns & Co. Inc. and Lehman Brothers Inc. were joint lead arrangers and joint bookrunners.
About Protection One
Protection One is one of the largest vertically integrated national providers of sales, installation, monitoring, and maintenance of electronic security systems to homes and businesses. Network Multifamily, Protection One's wholly owned subsidiary, is the largest security provider to the multifamily housing market. The company also owns the nation's largest provider of wholesale monitoring services, the combined operations of CMS and Criticom International. For more information about Protection One, visit http://www.protectionone.com/. (PONENR)
About Highfields Capital Management LP
Highfields Capital is a value-oriented investment firm which principally makes long-term investments in public and private companies in the U.S., Canada, and in other global markets. It currently invests over $11 billion of capital on behalf of investors that include college and university endowments, charitable and other philanthropic organizations and other institutional and high net worth individual investors. It invests in a wide variety of industries, securities and financial markets. Highfields Capital is based in Boston, MA. For further information, please visit http://www.highfieldscapital.com/.
About Arlon Group
Arlon Group is a private investment group formed by Continental Grain Company. Arlon Group invests across multiple strategies from a permanent base of capital. Arlon's direct investment group - Arlon Capital Partners -- makes direct, privately-negotiated investments into companies in several industries. Arlon Capital Partners' permanent capital base allows it to focus on creating long-term value by partnering with excellent management teams. Arlon is based in New York and invests in North America, Western Europe and China. For further information, please visit http://www.arlongroup.com/.
About Quadrangle Group LLC
Quadrangle Group LLC is a private investment firm with more than $6 billion of assets under management. Quadrangle invests in media and communications companies through separate private and public investment strategies and across all asset classes through its asset management business. All investment strategies seek to maximize value by leveraging the investment team's extensive experience, knowledge and industry relationships. Quadrangle has offices in New York, London and Silicon Valley and will be opening an office later this year in Hong Kong. For more information, please visit http://www.quadranglegroup.com/.
About Monarch Alternative Capital LP
Monarch Alternative Capital LP is a private investment firm with assets under management of approximately $3 billion. Monarch focuses primarily on investing in the debt of bankrupt and distressed companies. Monarch seeks superior risk-adjusted returns through its research-oriented investment strategy, which utilizes its investment team's extensive experience in the distressed debt market and long-standing network of relationships. Monarch is based in New York and has an office in Israel. For more information, please visit http://www.monarchlp.com/.
Forward-looking Statements: Certain matters discussed in this news release are "forward-looking statements." The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words or phrases such as "we believe," "we anticipate," "we expect" or words of similar meaning. Forward-looking statements may describe our future plans, objectives, expectations or goals. Such statements may address future events and conditions concerning customer retention, debt levels, debt service capacity, revenue stabilization and stabilization of our customer account base. Our actual results may differ materially from those discussed here as a result of numerous factors, including our significant debt obligations, net losses and competition. See our Annual Report on Form 10-K for the year ended December 31, 2006 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, for a further discussion of factors affecting our performance. Protection One disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this news release.
