Bethesda, Md. (August 3, 2017) – Capital One announced today that it served as the sole bookrunner, joint lead arranger and administrative agent for a $290 million senior secured credit facility for Interface Security Systems, headquartered in St. Louis and Plano, Texas. The facility consists of a $230 million senior term loan and a $60 million revolving line of credit. The funding will enable the company to refinance existing debt and provide capital to execute its growth strategy. Capital One is providing the credit facility in connection with a recapitalization of the business by Prudential Capital Partners and SunTx Capital Partners.
“Interface has been a long-standing customer and we are excited to be a part of this significant capital raise, which will help support continued growth for the business,” said John Robuck, Managing Director of Capital One’s Security Finance team. “Interface’s unique bundled service offering, its emphasis on growing segments of the commercial security sector, and the strength of its equity partners all contribute to their leading position in the market.”
Interface Security Systems is a pioneer in the deployment of cloud-managed internet protocol security services. From its platform, it assists many predominantly large, commercial, multisite customers simplify operations by combining both physical and network security solutions into one highly efficient, integrated services bundle.
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.”
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.
Both Prudential Capital Partners and SunTx Capital Partners focus on middle-market companies. SunTx Capital Partners is a Dallas-based private equity firm that invests in middle-market manufacturing, distribution and service companies. It typically invests in management buyouts and corporate spin-offs, consolidations, underperforming companies, growth equity, recapitalizations, generational transition and public-to-private transactions.
“As we put this transaction together, we knew we would need a lender who understands the security business and a partner that saw the potential in the company’s future,” said Ned Fleming, Managing Partner, SunTx Capital Partners. “We’ve had a long-standing relationship with Interface and this transaction will allow us to move forward to their next chapter.”
Prudential Capital Partners is a leading worldwide provider of private debt, mezzanine and equity securities. It provides subordinated debt and equity to companies in a wide range of industries, ranging from transportation to utility and finance. “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,” said Robert Derrick, Managing Director and Partner with Prudential Capital Partners. “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."
Capital One’s Security Finance team provides flexible financing solutions to security companies that need working capital, organic creation cost financing, and/or acquisition support. Imperial Capital provided advisory services to Interface in the course of this transaction.
About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $239.8 billion in deposits and $350.6 billion in total assets as of June 30, 2017. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.
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.
