Protection One pushing forward

SSN Staff  - 
Saturday, May 1, 2004

After the sale, it’s business as usual for alarm company

TOPEKA, Kan. - Industry watchers have been involved in heavy speculation regarding Protection One’s Chapter 11 status, especially after Standard & Poor’s Ratings Services recently lowered the company’s credit rating to CCC-.

But Protection One officials are taking it all in stride.

“It wasn’t unexpected,” Richard Ginsburg, chief executive officer of Protection One, said. “There is nothing in their report that was new.”

Protection One has been struggling with a heavy debt load since the acquisition era of the 1990s, when Westar Energy owned the company. Westar built Protection One into one of the country’s largest alarm companies and loaned it large amounts of cash when it was struggling. In February, Westar sold its 87 percent interest in the company.

All that has transpired has put Protection One in its current state - overburdened with $547 million in debt.

In the company’s March 31 annual report, Chapter 11 was mentioned as a one possible antidote for its financial ailments. If and when the company decides to file the action, is anyone’s guess

“Hopefully, by the end of the year, we will have a better idea of where we are,” Ginsburg said.

Until that time comes, Ginsburg noted that at Protection One it is business as usual.

“It’s really not affecting the business,” he said. “Operationally the company is fine and all of this noise is transparent to our customers and to our employees. This is only a financial restructuring”

In contrast to the company’s financial state, internal growth is the strongest it has ever been according to Gins-burg. The sales force has grown over the past few years and the company is looking to secure an aggressive stance in that arena. Also attrition rates, Ginsburg said, are half of what they were two years ago.

It will undoubtedly be a long and winding road for the security company. New owner Quadrangle Capital Partners has brought valuable investment dollars, but the long-range effects of the purchase is still to be determined.

“There is a lot of speculation in the industry about the business,” Ginsburg said.

Regardless, Ginsburg pointed out that it is not the same entity it was three years ago.

“We are not a dealer company,” he said. “It has really enhanced the sales function and we have expanded into the commercial side more.”

But that might not be enough to distract additional Chapter 11 speculation.