The number two photo enforcement company in the United States has expanded, as its arch-rival faces an internal power struggle and financial difficulties. On wednesday. American Traffic Solutions (ATS) announced that it had acquired the bankrupt photo ticketing company Nestor Traffic Systems for $7.1 million. ATS will take over Nestor’s existing contracts boosting the number of cities and counties in which ATS controls traffic enforcement from 170 to 200. Nestor recently went into receivership after the company’s debt became unsustainable. Despite heavy annual losses, top management at the Rhode Island company continued to enjoy lavish salaries and bonus packages. Nestor’s future came into sharp doubt earlier this year after subcontractors began complaining that the company was not paying for services rendered. ATS will now take over Nestor free of these debts.
Nestor was delisted from the Nasdaq Capital Markets in May 2008. The company faced internal struggles that surfaced in July 2005 and ultimately forced out the CEO in May 2007.
Now the number one operator of red light cameras and speed cameras in the US, Redflex Traffic Systems, is facing similar internal struggles after reporting a drop in profit margin on increased revenue. Last week, Standard and Poor’s announced that it had dropped Redflex from the ASX 300, the leading performance benchmark for the Australian Securities Exchange and a bellwether for the Australian economy.
“The quarterly rebalance considers the aggregate market capitalization and liquidity of stocks for the preceding six months of 2009 as a basis for eligibility,” the S&P explained in a statement.
Standard and Poor’s removes stocks that fail to meet liquidity guidelines on a regular basis. Redflex has acknowledged its liquidity problem by turning to Australian and Chinese investors to raise A$32 million in a desperate bid to “strengthen the company’s balance sheet and supplement existing banking arrangements.”
The company’s two largest shareholders, Cheng Man Oy of China and the Investaco mortgage company each agreed to invest $15 million in a new offering with existing Australian stockholders offered the opportunity to buy another $17 million in ordinary shares at a discounted price of $2.04 per share.
Management practices at Redflex have sparked a shareholder revolt with three major institutional investors calling for the heads of top company officials. Thorney Holdings, Hunter Hall and Renaissance today exercised their right to force a shareholder vote on November 19 on the removal of Redflex Chairman Chris Cooper and Directors Roger Sawley and Peter Lewinsky. The rebel firms named three individuals who seek to take over positions on the Redflex board.
“Despite heavy annual losses, top management at the Rhode Island company continued to enjoy lavish salaries and bonus packages.”
Yeah, private enterprise always does it best. Unless we are talking about traffic enforcement.
Kinda throws cold water on the “We’re doing all of this to make the roads safer” pitch, doesn’t it?
Nothing like lots of money and opportunity to create problems.
Yeah, private enterprise always does it best. Unless we are talking about traffic enforcement.
I suppose you haven’t heard of the enormous problem in public pensions in most states, and how they keep getting raised (retroactively!) even in the face of periodic budget troubles?
Traffic enforcement is a revenue game that sucks whether it’s public or the government contracting it out. It sucks whether it’s highway patrol with dumb speed limit laws or cameras. Whether it’s red light cameras or little towns in Arkansas that get all of their revenue from ticketing out of towners.
The local government is responsible for signing these contracts, and gladly accepts the money.
Couldn’t happen to more deserving people.
It’s an ill wind that blows no one any good.