- Creates leading security monitoring services company with a
diversified portfolio of security assets LAWRENCE, Kan. and ALBANY,
N.Y., Dec. 20 /PRNewswire-FirstCall/ -- Protection One, Inc.
(OTC:PONN) (BULLETIN BOARD: PONN) and Integrated Alarm Services
Group, Inc. (NASDAQ:IASG) today announced they have executed a
definitive merger agreement. The combined company will be named
Protection One, Inc., and Richard Ginsburg will continue to lead
the organization as its President and CEO. On a combined basis,
Protection One and IASG had revenues and adjusted EBITDA of $363.8
million and $104.4 million, respectively, for the 12-month period
ended September 30, 2006 (with adjusted EBITDA being measured prior
to the realization of any operating synergies). As of September 30,
2006, Protection One and IASG on a combined basis had recurring
monthly revenue ("RMR"), a well known valuation metric used for
monitoring services companies, of $26.8 million. The merged company
will be a market leader in each of the businesses in which it
operates: retail (residential and commercial), wholesale and
multifamily. Under the terms of the merger agreement, which has
been approved unanimously by the Boards of both companies, each
share of IASG will be exchanged for 0.29 shares of Protection One
common stock. Subsequent to the transaction, there will be
approximately 25.3 million shares of Protection One common stock
outstanding, of which IASG and Protection One shareholders will own
approximately 28% and 72%, respectively. It is expected the merged
company will be traded on the NASDAQ Stock Market. Contrarian
Capital Management, LLC, which is currently IASG's largest
beneficial shareholder and whose representative holds a seat on
IASG's Board, has expressed support for the transaction. In
addition, holders of approximately 85% of IASG's senior secured
notes have agreed to support the merger transaction as proposed and
to tender their notes in an exchange offer for new bonds to be
issued by a Protection One subsidiary. After the transaction is
consummated, Protection One's expanded nine member board of
directors will include four independent directors, two of which
will be IASG designees. The Protection One created by the merger
will be one of the nation's largest providers of security alarm
monitoring services to residential, commercial and national account
customers operating under one of America's most recognized alarm
brand names, Protection One(R); the nation's No. 1 provider of
wholesale alarm dealer services operating under the names of
Criticom International(R) and CMS; and the nation's No. 1 provider
of services to the multifamily market operating under the name of
Network Multifamily(R). The merged company will have 73 branches
across the country, six state-of-the-art monitoring response
centers, and a dedicated disaster recovery center. The management
teams of both companies believe the combination will result in cost
savings based upon scale efficiencies, the elimination of
redundancies and greater purchasing power. Management believes that
the combination will generate net savings of $11 million to $13
million annualized within 12 months of the closing of the
transaction. Richard Ginsburg, President and CEO of Protection One,
commented, "This transaction is a transforming event for Protection
One. Building on our previous successes, we believe combining with
IASG positions the new company for improved operating margins and
accelerated cash flow growth. We are pleased to expand our
shareholder base and believe that this merger will create value for
both IASG and Protection One shareholders. We will continue to have
strong product and service offerings for the residential,
commercial, national account and multifamily markets and an
unmatched network of central stations to serve the monitoring needs
of customers and independent alarm companies." Ginsburg continued,
"Wholesale operations will continue to operate separately from the
other divisions of the company. We believe merging our wholesale
entities will allow independent alarm companies to benefit from the
scale of that combined business as well as other benefits we intend
to offer through our buying power and increased size. Our ultimate
goal is to provide our independent alarm company clients with truly
new concepts in the areas of lead generation, equipment purchasing,
and financing." Charles May, President and CEO of IASG, said, "This
proposed transaction satisfies virtually all of the objectives
identified as part of IASG's evaluation of strategic options. We
are creating a market leader with the size and national footprint
necessary to be a highly successful security monitoring services
business in the twenty-first century. We are assembling the
resources and creating the business model to build a sizeable
growth business. This combination offers the opportunity to resume
creating shareholder value and, as a larger company, we expect the
merger will provide greater liquidity for both companies'
shareholders. I am excited about what the Protection One and IASG
businesses and people will be able to do together with one of the
best recognized and respected brands in the industry." The merger
will require the approval of IASG's shareholders and regulatory
approval. The companies will prepare a proxy statement/prospectus
in connection with seeking shareholder approval. Specific
post-transaction operating plans will be developed in upcoming
months in parallel with the preparation of the proxy
statement/prospectus. Pending regulatory approval, the approval of
shareholders and the satisfaction of certain customary closing
conditions, the transaction is expected to be completed in the
second quarter of 2007. The combined company will be headquartered
in Lawrence, Kansas. Professional Advisors Protection One is being
advised by Bear, Stearns & Co. Inc., Barnes Associates, Ernst
& Young Transaction Advisory Services, Kirkland & Ellis
LLP, and Simpson Thacher & Bartlett LLP. IASG is being advised
by Houlihan Lokey Howard & Zukin and Mayer, Brown, Rowe, &
Maw LLP. Conference Call and Webcast Protection One and IASG
management will hold a conference call and webcast at 8:30 a.m. EST
on December 21, 2006 to discuss the proposed merger. Investors may
participate in the conference call by dialing (877) 502-9272 or
(913) 981-5581 (for international callers) and using the access
code of 9063943. To participate in the webcast, go to the investor
relations section of the IASG Web site at http://www.iasg.us/ or
the Protection One Web site at http://www.protectionone.com/. A
webcast replay will be available shortly after the call in the
investor relations sections of both http://www.iasg.us/ and
http://www.protectionone.com/. A telephonic replay of the call also
will be available until January 4, 2007. To listen to the
telephonic replay, dial (719) 457-0820 or (888) 203-1112 and use
9063943 as the access code. About Protection One Protection One
reported revenues of $268.0 million and adjusted EBITDA of $84.1
million for the twelve months ended September 30, 2006. The company
ended the third quarter of fiscal 2006 with RMR of approximately
$19.9 million. At September 30, 2006, Protection One had cash and
cash equivalents of $20.5 million and total debt and capital leases
outstanding, excluding debt discounts, of $410.7 million. The
company employed approximately 2,450 staff members at September 30,
2006. For more information about Protection One, please visit
http://www.protectionone.com/. Protection One is majority owned by
affiliates of Quadrangle Group LLC. About IASG IASG reported
revenues of $95.9 million and EBITDA of $20.3 million (excluding
interest income) for the twelve months ending September 30, 2006.
The company ended the third quarter of fiscal 2006 with RMR of
approximately $6.9 million. At September 30, 2006, IASG had cash of
$16.2 million, performing collateralized notes receivable from
dealers of approximately $14.2 million, a promissory note of $6.5
million related to a divestiture, and total debt and capital leases
outstanding of $125.7 million. The company had 730 employees at
September 30, 2006. For more information about IASG, please visit
the IASG Web site at http://www.iasg.us/. Forward-Looking
Statements Certain statements in this press release may contain
forward-looking information regarding Protection One, Inc. and
Integrated Alarm Services Group, Inc. and the combined company
after the completion of the transaction that are intended to be
covered by the safe harbor for "forward-looking statements"
provided by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements generally can be identified as
such because the context of the statement includes words such as
"believe," "expect," "anticipate," "will," "should" or other words
of similar import. These statements also include, but are not
limited to, the benefits of the business combination transaction
involving Protection One and IASG, including future financial and
operating results, the combined company's plans, objectives,
expectations and intentions and other statements that are not
historical facts. Such statements are based upon the current
beliefs and expectations of the management of Protection One and
IASG and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking
statements. The following factors, among others, could cause actual
results to differ from those set forth in the forward-looking
statements: the ability to obtain governmental approvals of the
transaction on the proposed terms and schedule; the failure of
IASG's stockholders to approve the transaction; the risk that the
businesses of Protection One and IASG will not be integrated
successfully; the risk that the cost savings and any other
synergies from the transaction may not be fully realized or may
take longer to realize than expected; disruption from the
transaction making it more difficult to maintain relationships with
customers, management, employees or suppliers; costs and
availability of alarm equipment; competition and its effect on
pricing, spending, third-party relationships and revenues; social
and political conditions such as war, political unrest or
terrorism; general economic conditions and normal business
uncertainty. Additional risks and factors are identified in
Protection One's and IASG's filings with the Securities and
Exchange Commission ("SEC"), including Protection One's Annual
Report on Form 10-K and Form 10K/A for the year ended December 31,
2005 and IASG's report on Form 10-K for the fiscal year ended
December 31, 2005, which are available on Protection One's Web site
(http://www.protectionone.com/) and IASG's Web site
(http://www.iasg.us/), respectively. Protection One and IASG
undertake no obligation to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after
the date of this filing. Additional Information about the Merger In
connection with the proposed merger of Protection One and IASG, the
parties intend to file relevant materials with the SEC, including a
proxy statement/prospectus regarding the proposed transaction. Such
documents, however, are not currently available. INVESTORS ARE
URGED TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED
TRANSACTION WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors will be able to obtain a free copy
of the proxy statement/prospectus, as well as other filings
containing information about Protection One and IASG without
charge, at the SEC's Web site (http://www.sec.gov/) once such
documents are filed with the SEC. Copies of the proxy
statement/prospectus can also be obtained, without charge, once
they are filed with the SEC, by (1) directing a written request to
Protection One, Inc., Attention: Corporate Secretary, 1035 N 3rd
Street, Suite 101, Lawrence, KS 66044, or by calling (785) 856-9368
or (2) directing a written request to Integrated Alarm Services
Group, Inc., Attention: Brian Shea, 99 Pine street Albany NY,
12207, or by calling (518) 426-1515. Protection One, IASG and their
respective directors and executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies from IASG stockholders in respect of the
proposed transaction. Information regarding Protection One's
directors and executive officers is available in Protection One's
information statement for its 2006 annual meeting of stockholders,
as filed with the SEC on April 28, 2006. Information regarding
IASG's directors and executive officers is available in IASG's
proxy statement for its 2006 annual meeting of stockholders, as
filed with the SEC on August 3, 2006. Additional information
regarding the interests of such potential participants will be
included in the proxy statement/prospectus and the other relevant
documents filed with the SEC when they become available.
DATASOURCE: Protection One, Inc. CONTACT: Media: Robin J. Lampe,
+1-785-856-9350, Investors: Darius G. Nevin, +1-785-856-9368, both
of Protection One, Inc.; or, Investor & Media: Joseph L.
Reinhart, +1-518-426-1515, Integrated Alarm Services Group, Inc.
Web site: http://www.protectionone.com/ http://www.iasg.us/
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