TRM Looks to Revival with $15 Million Deal for Access To Money

After a long period of downsizing and financial turbulence, non-bank ATM network operator TRM Corp. says it's getting its act in order and is ready to grow again. Portland, Ore.-based TRM just bought the New Jersey-based Access To Money network in a $15 million deal that brings another 4,200 ATMs under its wing. In the past week, TRM also announced that it has raised $11 million in a new loan, financing that president and chief executive Richard Stern says resolves TRM's credit issues. The company added it would give up its fight to remain listed on the Nasdaq Global Market stock exchange. In an analysts' conference call Wednesday morning, Stern called Access To Money “a phenomenal cultural fit” with TRM's existing network, which now has about 12,200 machines in the U.S. Stern said most of Access To Money's machines are merchant-owned, located in high-traffic locations, and will add 14 million transactions to TRM's network, which had 35.2 million withdrawal transactions last year. In response to an analyst's question, he said Access To Money's average merchant contract is about 32 months and that its per-machine fee generation is about the same as TRM's. The combined company will have about $101 million in annual gross revenues and pre-tax earnings about $5.5 million to $6.5 million, according to Stern. TRM posted revenues of $90.4 million last year. According to TRM's 2007 annual report, the average TRM machine handled 286 withdrawal transactions a month and generated $2.37 in fees per transaction. The average transaction fee paid to the merchant where each machine is located was $1.61, leaving 76 cents for TRM's remaining expenses and profit. TRM funded the acquisition of Whippany, N.J.-based LJR Consulting Corp., which does business as Access To Money, through a combination of cash, stock, and a note. Part of the $11 million loan from LC Capital Master Fund Ltd. helped pay for the acquisition. Douglas Falcone, Access To Money's founder, president, and chief executive, is now TRM's chief operating officer. TRM has shed its foreign operations and photocopier business and culled low-volume U.S. ATMs in order to get back into the black and compete with its larger rival, Cardtronics Inc. (Digital Transactions News, Nov. 12, 2007). The company hasn't made a profit since 2004 and last year lost $8.43 million. Its auditors have issued “going-concern” warnings about TRM's continued ability to stay in business. But now Stern says TRM has stabilized. TRM will use the rest of the LC Capital loan to pay down several other obligations, including the settlement of $2.5 million in disputed charges with its former service provider, eFunds, which is now part of Fidelity National Information Services Inc. LC Capital Master Fund is an affiliate of Lampe, Conway & Co. LLC, a New York hedge fund that invests in distressed companies. “We believe TRM is a now a sustainable, viable enterprise that will prove to be an extremely competitive force in the marketplace,” Stern said at the conference call. He later added, “We removed any pending liquidity issues.” TRM's two biggest partners are the convenience-store chains The Pantry and Cumberland Farms. Stern says TRM will pursue more merchant partnerships and also seek business with banks and credit unions. The Nasdaq was set to delist TRM's stock on Wednesday because the company's share price, which has fallen from a 52-week high of $2.89 to as low as low as 20 cents, no longer meets the exchange's minimum price requirements. (In mid-afternoon trading, shares were priced at 42 cents.) After Wednesday, TRM's shares will trade through the Pink Sheets electronic-quotation service. TRM had appealed the delisting, but now has withdrawn the appeal. Stern said terms of its recent financial deals made continued listing on the Nasdaq “impossible,” and that TRM instead would move on to more pressing matters such as integrating Access To Money.