Protection One credit rating downgraded

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Thursday, January 1, 2004

TOPEKA, Kan. - Protection One’s credit rating has been downgraded by Standard & Poor’s Rating Services, an implication that the up-for-sale alarm company may need to restructure its debt or file for bankruptcy after it finds a buyer.

The downgrading from B to CCC- comes on the heels of Protection One’s recent filing with the Securities and Exchange Commission and its admission that the buyer may need to restructure its debt.

The company, a wholly owned subsidiary of Westar Energy, has relied on Westar Industries to provide it with funds. As of September, the company had about $547 million of total debt outstanding, excluding operating lease adjustments.

Robin Lampe, a spokesperson for Protection One, said the company anticipated the downgrade, in light of its recent quarterly filing with the SEC. She said the company is obligated “to account for a number of different scenarios that could possibly happen, particularly any potentially negative outcomes, in order to fulfill our obligations to stakeholders and public markets.”

The S&P said it downgraded Protection One’s credit rating because Westar Energy lowered its estimates on the sale price for Protection One. Westar reduced its estimated proceeds from a sale of Protection One by $165.6 million, but the company said there is a risk that it may not recover its outstanding balance of the senior credit facility.

Westar officials hope to find a buyer for the alarm company by early 2004.