TRM Gets $11 Million Lifeline; Buys Rival "Access to Money"

Implications: TRM's $11 million "lifeline" from LC Capital Master Fund Ltd. helps the troubled ATM owner pay off its debts and gave TRM the seed money to acquire its rival, ATM deployer "Access to Money." When TRM acquired eFunds ATM Portfolio of 17,200 ATMs in 2004 for $150 million, TRM had over 22,000 ATMs and owned the largest international ATM network by a U.S. company. Since that time TRM has restructured its ATM Operations and its ATM Network fell to less than 9,300 ATMs and forced TRM to sell its international ATM Operations and what use to be its "core" business, its "Photocopier Unit" to remain in business. TRM grew way too fast through acquisitions and the acquisitions didn't generate significant cashflows or decent ROI. Since 2Q07, TRM has focused on its current assets rather than growing through acquisitions, reduced its expenses, simplified business operations, cleaned out those low transacting ATMs acquired from eFunds and added units to their legacy ATM fleet.   

Analysis: TRM got an $11 million financial "lifeline" to avoid bankruptcy and to pay down its debt. TRM used a portion of the loan to acquire "Access to Money," an ATM deployer with a strong sales and service infrastructure, who should complement TRM's ATM Operations and create cost synergies to help TRM make a turnaround. TRM's plan to restructure its operations, reduce expenses and streamline costs to make its ATM Portfolio more profitable again could pay off dividends with the "Access to Money" acquisition. TRM saw a huge decline in its ATM Portfolio and net losses as a result of growing too fast through acquisitions and paying too much for some ATM portfolios they acquired in the last four years.

1.  TRM was plagued by low transacting ATMs that were "merchant owned" contracts that they lost due to attrition when they acquired the portfolio from eFunds in 2004. A lot of the 17,200 machines were older machines and required more service and maintenance and TRM incurred the expense of upgrading the ATMs to ensure compliance with the card networks 

2.  In an effort to reduce its ATM service and maintenance expenses, TRM has outsourced service and maintenance of its ATMs to NCR, rather than utilizing several service providers. Since 2007, TRM added over 1,000 ATMs to its legacy fleet , which typically generates a higher gross margin, per unit than "merchant owned" ATMs

Takeaway:  TRM made it through a rocky 2007 and managed to stave off bankruptcy with a $11 million loan and acquisition of "Access to Money." The ATM portfolio acquired by eFunds has proved to be a "heavy weight" on TRM's balance sheet. Access to Money should bring synergies and cost efficiencies to TRM to help TRM reduce its debt, strengthen its competitive positioning and position TRM for future growth and expansion.