Interface Secures $125 Million of Growth Equity Capital From SunTx and Prudential Capital Partners
Company Closes $600 Million Refinancing With the Redemption of all Existing Debt, Reducing Annual Cash Interest Expense by Approximately 45%, Extending Debt Maturities by 5+ Years
Interface Achieving Record Growth and Recurring Monthly Revenue, With Significant Pipeline for New Projects
St. Louis, MO and Plano, TX – August 3, 2017 – Interface Security Systems (“Interface” or the “Company”), today announced the completion of a refinancing for a new capital structure that will facilitate strategic growth and expansion, with substantial contributions of new growth equity capital of $125 million from SunTx Capital Partners and Prudential Capital Partners.
Interface, headquartered in St. Louis, Missouri and Plano, Texas, is a recognized industry leader and pioneer in providing a comprehensive bundle of monitored, mission-critical managed network, physical security and business intelligence (“BI”) services to large multi-location businesses over a private PCI-compliant cloud-based network. The Company provides such services to many of North America’s most recognized companies in the retail, hospitality, and restaurant industries.
Additional Information on the Refinancing
Pursuant to the $600 million refinancing, the Company’s existing debt including the $50 million Capital One Revolving Credit Facility, the $230 million Senior Secured Notes due 2018, and the $115 million Senior Contingent Cash Pay Notes due 2018, have been redeemed in full and the $67 million PIK Senior Notes due 2019 have been exchanged for new PIK Senior Notes due 2023. The new debt capital structure includes a $290 million Senior Credit Facility consisting of a $230 million Term Loan A and an undrawn $60 million Revolving Credit Facility led by Capital One. Additionally, Prudential Capital Partners will be providing $100 million of Senior Subordinated Notes.
Ned N. Fleming, III, Founder and Managing Partner of SunTx Capital Partners, said, “With a new capital structure Interface is now ideally positioned to continue capitalizing on opportunities for accelerated growth and expansion. We are excited to invest additional growth-equity capital into the Company and, in particular, to partner with Prudential Capital Partners. We look forward to further enhancing our productive partnership with Interface, as the Company continues to achieve record growth.”
Mr. Fleming continued, “On behalf of myself and our entire team at SunTx, I’d like to thank our advisors on this transaction, who offered exceptional guidance throughout the process.”
Michael Shaw, CEO of Interface Security Systems, said, “This recapitalization is an important step forward for the Company as we continue to lead the retail digital technology transformation with our cloud-based bundled IP managed security, network and interactive video services. Moving forward now with a stronger balance sheet and improved cash flows, the Company will focus on increasing our sales and marketing initiatives, expansion into new vertical markets, investment in new technologies and development of additional managed services that will enable us to provide an even broader range of mission critical cloud-based bundled services to both our existing customers and new clients.”
Robert Derrick, Managing Director and Partner with Prudential Capital Partners, said, “With the support of SunTx, Interface Security Systems has developed a very impressive bundle of IP managed services to which their customers have reacted very positively. We are pleased to be a partner in a new capital structure that will provide Interface with the ability to continue to grow and provide value to their customers.”
John E. Mack III, Executive Vice President, Co-Head of Investment Banking and Mergers & Acquisitions at Imperial Capital, said, “We could not be more excited at the successful completion of this new financing for Interface. It is gratifying to be associated with such an innovative and successful company at the front edge of new and more effective security and business intelligence solutions within the security industry. We appreciate the confidence placed in us by the management team and SunTx to lead this new financing, which was oversubscribed, and we look forward to continuing to work alongside the Company and its investors for more success in the future.”
Imperial Capital LLC acted as financial advisor to Interface and Akin Gump Strauss Hauer & Feld LLP served as legal counsel for Interface. Schiff Hardin LLP served as legal counsel for Prudential Capital Partners. Buchanan Ingersoll & Rooney PC served as legal counsel for the lenders. Wilmer Cutler Pickering Hale and Dorr served as legal counsel for the bondholders.
About Interface Security Systems
Interface Security Systems is a leading cloud-based provider of managed physical and network security services company headquartered in St. Louis, Missouri and Plano, Texas. Interface
manages a broad range of secure, IP-based security solutions, including interactive video surveillance and business intelligence services, primarily to distributed enterprise national accounts in the specialty retail, hospitality, restaurant and small business markets. Interface operates two UL Approved 5-Diamond CSAA Certified Secure Operations Centers and a nationwide service delivery infrastructure. Interface is a portfolio company of SunTx Capital Partners. For more information on Interface, visit www.interfacesystems.com.
About SunTx Capital Partners
SunTx Capital Partners, LP, is a Dallas, TX based private equity firm that invests in middle market manufacturing, distribution and service companies. SunTx specializes in supporting talented management teams in industries where SunTx can apply its operational experience and financial expertise to build leading middle-market companies with operations typically in the Sun Belt region of the United States. The capital committed by SunTx comes from the principals of SunTx as well as from institutional investors, including leading university endowments and corporate and public pension funds. More information about SunTx can be found at www.suntx.com.
About Prudential Capital Partners
Prudential Capital Partners is the middle market mezzanine fund business of Prudential Capital Group, the private capital investment arm of PGIM, Inc., the global investment management business of Prudential Financial, Inc. (NYSE: PRU). Prudential Capital Group has been a leading provider of private debt and junior capital to companies globally for more than 75 years. Managing a portfolio of $79.1 billion as of March 31, 2017, Prudential Capital offers senior debt and junior capital, leveraged leases, and equipment finance to companies worldwide. The global office network has locations in Atlanta, Chicago, Dallas, Frankfurt, London, Los Angeles, Milan, Minneapolis, Newark, New York, Paris, San Francisco and Sydney*. For more information, please visit prudentialcapitalgroup.com or prudentialcapitalpartners.com
*Operates through PGIM (Australia) Pty Ltd.