by Maureen Flanagan
ICI Security Systems, Inc., is a world leader in protecting cash in banks, ATMs, safes and all segments of the cash delivery chain. Using proprietary electronic smoke and ink technologies, the Exton, PA-based company makes products that are highly effective in deterring bank robberies, recovering stolen cash, and identifying perpetrators. Security Systems' flagship product, the SecurityPac Electronic Protection System (SPEPS), is the world's most successful money recovery system. As a result, the company has captured over 75% of the market in North America and more than 70% worldwide.
For the past 31 years, ICI Security Systems has been owned by Imperial Chemical Industries PLC, a publicly traded chemical company based in the UK. When Imperial began to shed non-core assets, its security business found itself on the block.
In a July 26, 2002 transaction, Security Systems was purchased by3SI Security Systems, with Lincolnshire Management, Inc., a New York based private equity firm, acting as equity sponsor. In support of the buyout, American Capital Strategies (Nasdaq: ACAS) provided $13 million of senior subordinated debt financing.
"This financing enables our company to develop new technologies for currency protection and expand into new markets and geographic areas," said Thomas Oxenfeld, the company's CEO.
The company's core and original SecurityPac product is used by bank tellers throughout North America and Europe. Marketed as FlexPac, it consists of flexible bundles of real currency that contain transmitters, tear gas (except in Europe, where tear gas is outlawed), red dye, and electronics. When the bank robber leaves the bank, transmitters activate electronics in the SecurityPac causing tear gas and a cloud of red smoke to startle and disable the robber, draw witnesses to the scene, and permanently stain the money, marking it as stolen if the robber escapes. Variations and enhancements of this product are marketed as ThinPac l and ll.
The company also leads the industry in cash protection for ATM machines and other applications. SecuriDab, used in France; Scorpion; and Octopus stain money inside an ATM when a robbery is attempted. A similar staining technology is used to protect the contents of vaults or safes, and additional products protect cash and valuables in transit.
Security Systems' products are endorsed by the FBI and U.S. Treasury Department and have resulted in an impressive record of recovering stolen money. While only 16% of stolen money is recovered in robberies throughout the United States, SPEPS customers have recovery rates of 65% to 75%. Over the past 20 years, more than $60 million of stolen money has been recovered and 5,700 robbers apprehended in more than 17,500 bank robberies where tellers handed out SecurityPac. The company's top customers include major banks worldwide including Royal Bank of Scotland, Bank of America, Lloyds of the UK and CIBC. The company outsources its principal manufacturing activities but operates assembly, testing and shipping facilities in Byron, GA and Zaventem, Belgium.
"Security Systems has been a highly successful company, posting revenue and profit growth for the past 13 years. Now as an independent entity, it is well positioned to take advantage of growing market opportunities," said Jeri J. Harman, American Capital Principal and Managing Director.
American Capital's $13 million of senior subdebt was part of a financing package that included senior financing by GE Capital. Lincolnshire Management and the company's management made equity investments. 3SI Security joins American Capital's portfolio of more than 65 companies.
Click here for more information about American Capital's portfolio.
Bank robbery and ATM theft and vandalism occur frequently, particularly during economic downturns. In the US alone, bank robberies ranged from 6,600 to 9,400 per year over the last decade. In addition, ATM crime has been escalating worldwide and analysts predict that the number of ATMs globally will increase from about 600,000 in 1997 to more than two million by 2007. Only a small percentage of tellers and ATMs are protected with security devices, representing a major market opportunity for Security Systems.
As the market leader, Security Systems continues to refine its products to enhance protection effectiveness. ThinPac ll, which will be available in August 2002, is thinner than FlexPac with the capability of releasing more smoke and dye. It is expected to be the premier teller protection product on the market and opens the doors for use of the company's products in such markets as restaurants, jewelers and grocery stores.
Security Systems is poised for market expansion wherever there is a bank branch/ATM infrastructure and a crime risk. Conditions are ripe for implementation in many parts of Asia and Latin America. The cash-in-transit segment of the market (transporting of cash between branches and from the branch or truck to the ATM) is also expected to grow, especially in Europe, Asia and Latin America. In addition, new tracking technologies offer opportunities for the market. These include GPS/Cellular and E911, which pinpoints the location of emergency calls.
As an independent company, Security Systems is well equipped to protect currency at any point of the cash delivery chain. Cashing in on its highly effective products and top market position, Security Systems keeps money in the bank.
