May 16 Buyout firm Platinum Equity LLC is
nearing a deal to acquire Securus Technologies Holdings Inc, the
second-largest provider of phone services to U.S. prisoners, for
close to $1.5 billion, including debt, people familiar with the
matter said on Tuesday.
The deal illustrates private equity firms' strong appetite
for investments in prison phone service operators because of the
strong cash flow they generate from facilitating phone calls,
even as they attract criticism over the rates they charge.
The acquisition would come after the U.S. Federal
Communications Commission (FCC) decided earlier this year, under
its new chairman, U.S. President Donald Trump appointee Ajit
Pai, not to defend in court part of the caps that it placed in
2015 on the rates of prison inmate phone calls.
A deal between Securus' existing owner, ABRY Partners, and
Platinum Equity could be announced in the coming weeks, the
sources said, asking not to be identified because the matter is
Platinum Equity declined to comment, while Securus and ABRY
Partners did not respond to requests for comment.
Securus, based in Dallas, provides phone services to more
than 1.2 million inmates across North America. In exchange it
charges prisoners and the families hefty fees, which it
justifies by pointing to the costs of the technology to keep the
calls secure, such as call monitoring and voice recognition. It
also pays a commission to the prison operators.
Following controversy over the prices Securus and its larger
peer, Global Tel*Link Corp, charge for phone calls to prisoners,
which end up costing many of their families hundreds of dollars
every month, the FCC in 2015 placed a cap on the rates.
Interstate phone calls to contact prisoners are now capped
at 21 cents per minute for debit and prepaid calls, and 25 cents
per minute for collect calls.
Caps for intrastate calls, however, are currently under a
court stay, so 15-minute phone calls in many U.S. states can
cost between $10 and $20. The FCC told the U.S. Court of Appeals
in Washington, D.C. in January that it would drop its defense of
the intrastate phone call rate caps, leaving prisoner rights
advocates to defend them on their own.
ABRY Partners acquired a majority stake in Securus in 2013
from another buyout firm, Castle Harlan Inc, in a $640 million
deal. Global Tel*Link is also owned by a private equity firm,
American Securities LLC.
(Reporting by Greg Roumeliotis in New York; Additional
reporting by Jonathan Stempel in New York; Editing by Steve