Pinnacle has new $275m financing package

OREM, Utah—Pinnacle Security announced today that it has closed on a new financing package that is one of the largest credit facilities in the industry.

“It's a $275 million financing package that refinances existing debt and provides for several years of growth capital,” Sean Forrest, CFO of the major summer sales model security company, which is based here, told Security Systems News.

The deal includes an “opportunity for expansion to $400 million as the company grows,” the company said in a March 24 announcement.

Participating in the facility was a group of lenders, all with experience in the security space and led by Bank of America Merrill Lynch, Forrest said. Those lenders “have been supporting the company for many years and have been our lead banks since 2007… It's great support that our existing banks stayed with us and increased, and we added several new banks.”

Forrest declined to reveal specifics on how much of the package was refinancing of existing debt, and how much was new capital. However, he said, “with the exception of just a handful of credit facilities, this is one of the largest financings that has been done in the security alarm space.”

He said it is an affirmation of Pinnacle.

“This is really great for the business,” Forrest said. “It provides us with long-term funding capacity for our growth, and it's a measure of the stability of the business and … a validation of all the improvements that have been made to Pinnacle over the last several years.”

He said the company is growing rapidly.

“We're growing at about a 50 percent per year kind of pace,” he said. “We're adding a lot of subscribers on an annual basis and expanding, we're nationwide in the U.S. and Canada and have a lot of growth potential and this provides us with the capital to keep going at that pace.”

Pinnacle also initiated an organizational culture shift last year to improve its nationwide image, and has taken the lead in the recent creation of the new Alarm Management Association of Utah, whose members will be in the summer sales, door-knocking industry.

Forrest said that Pinnacle is “expecting a very strong summer sales season (in 2011). Our recruiting has been terrific, and my job is to provide enough capital for everything the sales force can achieve.”

He said the sales force will be “up over last year,” but declined to give specific numbers.

Forrest became CFO of Pinnacle late last summer and has prior experience in banking as well as security.  He was managing director at the PrivateBank, served as CFO for HSM Electronic Protection Services, and was senior VP at LaSalle Bank.

Stuart Dean, Pinnacle VP of corporate communications, said Forrest's banking background “was very helpful and instrumental” in securing the facility.

Forrest explained: “The lenders know me and my experience and the way I've done business and I think that's been helpful in getting people up to speed on Pinnacle and what our plans are. And they know that we're going to do our part in the deal, and give them what they need to do their job, so I think from that perspective the lenders like having a person who's been on their side of the table.”

Pinnacle, founded in 2001, was acquired in 2008 by private equity firm Golden Gate Capital. In announcing the new financing package, Forrest also stressed that the firm “is our majority investor and we continue to receive very strong support from Golden Gate.”