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Western Resources Shifts Protection One Stakes

Utilities: The Kansas company buys the European business of the Culver City-based security firm for $244 million.

March 02, 2000|From Bloomberg News

Western Resources Inc., a Kansas utility company, shuffled the assets and liabilities of its money-losing Protection One home-security affiliate on Wednesday.

Western said it bought the European operations of Culver City-based Protection One for $244 million. Western's Westar Capital unit paid Protection One $183 million in cash and gave it debt securities with a market value of $61 million.

Protection One, in turn, will use the proceeds to reduce debt owed to Westar Capital. Protection One had a line of credit with Westar that allowed it to borrow up to $250 million.

As part of the transaction, the total amount that can be borrowed was reduced to $115 million, though that could be increased by $40 million if Protection One makes acquisitions, the companies said.

Western Resources, its earnings depressed because of losses at debt-burdened Protection One, said last year that it may spin off all or part of its stake in the company.

Topeka, Kan.-based Western Resources owns 85% of Protection One, the second-biggest electronic home and business security company.

Western was forced to restate its 1997 and 1998 earnings because regulators ordered changes in income reported by Protection One.

Shares of Protection One have plunged more than 90% since 1997, in turn helping to drag down Western's stock.

Kansas City Power & Light Co. canceled a planned $2.5-billion buyout by Western Resources because of Western's depressed stock price.

Protection One has 1.6 million customers in North America and Europe, a business built up by years of debt-financed acquisitions of smaller security companies.

The European unit that Protection One is selling to Western has 126,341 customers in six European countries, along with 1,571 employees.

On the New York Stock Exchange, Western shares rose 6 cents to close at $15.50, while Protection One gained 6 cents to close at $1.75.

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