Securus to seek consents from lenders, 11% noteholders for Syscon acquisition

By Jennifer Chiou

New York, April 16 - Securus Technologies Inc. will seek to obtain consents from its lenders, including holders of its 11% second-priority senior secured notes due 2011, to incur additional debt to fund the purchase price of Syscon Holdings Ltd., according to an 8-K filing with the Securities and Exchange Commission.

On April 11, Securus and Appaloosa Acquisition Co., its wholly owned subsidiary, entered into a stock purchase agreement with 0787223 B.C. Ltd and its sole stockholder, Floyd Sully, under which Securus will acquire all the outstanding capital stock of Syscon Holdings Ltd.

Under the agreement, the initial purchase price for Syscon's capital stock is about $41 million and 45,604 Securus shares.

In addition, Securus said it will pay Sully $7 million after each of the first three 12-month periods after the closing date if Syscon's revenues exceed certain thresholds, provided that Sully has not resigned or been terminated. The revenue thresholds for the full earn-out payments are $56.5 million for the first 12 months, $61.5 million for the second 12 months and $63.1 million for the third 12 months.

If Syscon's revenues are less than the aforementioned thresholds, but greater than $30 million for the first 12 months, $33.33 million for the second 12 months and $36.67 million for the third 12 months, the company said that Sully will earn a portion of the $7 million payment linked to the applicable year.

Securus must obtain consents from holders of a majority of the notes.

The Dallas-based provider of detainee telecommunications and information management products said it has until June 20 to close the acquisition.

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