* Second dividend in 15 months
* One of three largest security agencies
* Acquisitions may lie ahead
The two dividends are the first returns that Blackstone Group has received from the Conshohocken, Pennsylvania company since the New York megafirm bought it in 2008 in a $756 million deal.
The portfolio company, which does business as AlliedBarton Security Services, is in the market now for a $1.2 billion credit facility, sister service Thomson Reuters Loan Pricing Corp reported. The package includes an $840 million seven-year first-lien term loan, and a $365 million 7.5-year second-lien term loan. Proceeds will refinance existing debt, fund a dividend and back potential acquisitions.
Moody’s Investors Service Inc put the value of the recap at $222 million, following a $125 million distribution in November 2012. Moody’s called the latest payout “a continued and accelerated employment of an aggressive financial policy.” Together, the payments represent a return of 45 percent of the value of the six-year-old buyout.
Blackstone Group declined comment, but a person familiar with the transaction said AlliedBarton’s strong cash flows will support the recap. Moody’s put the company’s revenue at $2 billion for the 12 months ended September 30, 2013.
AlliedBarton is one of the three largest security agencies in the highly-fragmented U.S. market, Moody’s said. While it faces numerous competitors in the markets it serves, few have the national reach to serve larger clients. The company provides third-party guards and staffing services, armored vehicle services and other security services to a range of industries. Its existing contracts provide it with a source of steady, recurring revenue, the credit agency noted.
AlliedBarton does appear to be setting the table for acquisitions, perhaps later this year. The first-lien term loan will have $220 million funded on a delayed-draw basis, while the second-lien will have a $100 million delayed-draw term loan, LPC reported.
The most recent transaction listed on the company’s website was an August 2012 technology partnership with Jolly Technologies to offer clients a visitor management and tracking system. AlliedBarton did not respond by deadline to a request for comment.
The dividend deal is expected to increase the company’s leverage to 6.5x EBITDA, Moody’s estimated, from 5.3x EBITDA as of last Sept. 30. The agency lowered the company’s debt rating to B2 from B1, and changed the outlook to negative, citing the higher leverage and potential business-integration risks. In Moody’s ratings system, B rated obligations are considered speculative and subject to high credit risk.
AlliedBarton, long a supporter of military veterans, reported in January that it hired more than 5,000 military veterans and reservists in 2013. Blackstone Group committed last April to hire 50,000 veterans across its portfolio companies over the next five years.