Tri-S Security Closes Acquisition of Cornwall Group
ATLANTA - Tri-S Security Corporation (NASDAQ:TRIS), a provider of contract guard services to various Federal government agencies pursuant to long-term contracts, announced today that it has acquired all of the outstanding capital stock of The Cornwall Group, Inc., a provider of security and investigative services, including armed and unarmed uniformed guards, video and monitoring, alarm installation and GPS monitoring. The aggregate purchase price for the acquisition was $13,500,000 in cash plus the assumption and payment at the closing of the acquisition of $1,800,000 of bank debt.
The acquisition was financed by Capital Growth Financial, LLC and LSQ Funding Group, L.C. Capital Growth served as the underwriter of Tri-S' initial public offering which occurred on February 9, 2005 and provided gross proceeds of $12,420,000. Capital Growth Financial raised approximately $8,000,000 for this acquisition through the issuance of callable, convertible promissory notes and warrants. LSQ, which has already provided a $6,000,000 line of credit for Tri-S, increased its commitment to Tri-S by providing a new $5,150,000 term loan and an additional $6,000,000 in new revolving credit.
Tri-S anticipates that revenues for Cornwall will exceed $40,000,000 for 2005 and projects revenues for the combined operations of Cornwall and Tri-S to exceed $90,000,000 for 2006.
Based in Miami, Florida and providing security services in the Dade, Broward and Palm Beach areas, Cornwall is one of the largest security companies in the state of Florida. Tri-S has signed long term employment agreements with key personnel and will increase its total work force to over 2,250 with the acquisition of Cornwall.
Operating under various subsidiary names including Forestville, International Monitoring, Protection Technologies, Vanguard Security, Vanguard of Broward, Armor Security and On Guard Security and Investigations, Cornwall serves both commercial and government customers, including Ford Motor Company, Federated Department Stores, State of Florida, City of Miami, University of Miami, Royal Caribbean Cruises, Federal Express and others.
Ronald G. Farrell, Chairman and Chief Executive Officer of Tri-S, stated that, "The acquisition of Cornwall is of particular significance as it both diversifies our business into the commercial sector, which has higher gross margins than the government sector, and it also offers us a springboard for expansion into the entire state of Florida. As a result of this acquisition, Tri-S will accomplish its goal of diversification. Our customer base now consists of 55% government and 45% commercial."
