Protection One secures ‘fresh start’

Richard Ginsburg awakened Monday with $120 million less to worry about.

Protection One Inc. — of which Ginsburg is president and chief executive officer — announced Monday it had a plan to restructure finances so nightmares of filing for bankruptcy protection soon could turn into dreams of customer growth.

“It’s been a tough year,” Ginsburg said. “Our employees have been waking up every morning wondering if the company would be filing for Chapter 11. It’s been hard for everybody.

“This is a fresh start.”

Protection One, a monitored-services security company with 1 million customers, announced that Quadrangle Group, the company’s majority owner, had agreed to convert $120 million in debt to 800 million shares of stock.

Protection One then would complete a reverse stock split, leaving Quadrangle with ownership of about 97 percent of the company. Quadrangle manages about $2.5 million in assets through an equity fund focused on media and communications companies, and another group that invests in financially troubled companies.

“With its improved balance sheet, Protection One is well positioned to take advantage of interesting growth opportunities going forward,” said Michael Weinstock, a managing principal for Quadrangle.

Protection One’s former majority owner, Topeka-based Westar Energy, also said Monday it would settle $73 million in obligations related to tax sharing by paying Protection One $45.9 million in cash and tendering $27.1 million in Protection One senior notes, including interest.

The moves — expected to close within four months — are designed to slash Protection One’s debt and allow the company to once again aggressively market itself to residential and commercial customers. A completed deal would cut $190 million in debt from the company’s current $547 million debt.

The company’s annual interest payments alone will drop to $29 million from $45 million, Ginsburg said, giving the company the financial ammunition it needs to battle 10,000 U.S. competitors in a growing market.

Richard Ginsburg, Protection One president and chief executive officer, prepares for the opening of the company's new headquarters in the I-70 Business Center in North Lawrence.

“We become a much more fierce competitor,” Ginsburg said. “This is a financial restructuring that will be transparent to our customers and to our employees, but it won’t be transparent to our competitors. When you have a half billion dollars in debt and $45 million in interest, your hands are shackled.

“This gives us the opportunity to compete. We’re euphoric.”

The news comes as Protection One employees move this week into their new headquarters in Lawrence.

The company — with 65 offices, 2,300 employees and revenues of $277 million last year — is moving its corporate headquarters from its scattered presence on five floors of the Westar building in Topeka to a one-level operation in the I-70 Business Center in North Lawrence.

The move is to start Thursday and is expected to be complete by Friday, when 65 Protection One staffers will take their seats on new chairs, at new tables, behind new computers and with a new approach in the former Liz Claiborne store, fresh off a $300,000 remodel.

“During the past few years, our employees, key customers and suppliers have stood by us,” Ginsburg said. “We are grateful for their dedication as Protection One moves forward with a new, stronger balance sheet.”