Skip to comments.ATS secures investment from Goldman SachsPhoenix (speed cameras being used in more than 120 cities)
Posted on 06/11/2010 8:37:27 AM PDT by day21221
ATS secures investment from Goldman SachsPhoenix Business Journal - by Patrick O'Grady Phoenix Business Journal
Dave DAmato, design and engineering manager for American Traffic Solutions Inc., works on a device that will take pictures of speeders. View Larger American Traffic Solutions Inc. is getting an investment boost from Goldman Sachs Group Inc. to help it meet increasing demand for its red-light and speed cameras.
Although neither company would disclose the amount of the investment, ATS President James Tuton said it was a significant amount that will net the former investment house, now a bank holding company, two seats on the private Scottsdale companys seven-member board.
The funds will help ATS keep pace with its rapid growth, which has been clocked at 83 percent over the past 18 months. The company has been funding its own operations until now, primarily through cash flow or financing, said Adam Draizin, executive vice president and chief financial officer.
For us to keep up with that growth, we have to spend a lot of money, he said.
As more cities use ATS photo radar and red-light cameras, an increasing number are deciding to follow suit particularly in tight economic times, when they are seen as revenue generators, Tuton said.
They all get it now, and they say, If it works there, it can work here, he said.
ATS cameras are being used in more than 120 cities. The company owns and operates the equipment, providing services to entities that contract with it to manage the resulting traffic tickets. That calls for the company to invest in substantial infrastructure to develop the camera sites, using money collected through a surcharge on the tickets issued.
Given the deteriorating credit markets, ATS decided to pay down debt and take on an investor instead of trying to continue financing on credit and reinvesting its own profits, Draizin said.
Goldman Sachs committed to the infusion just before the Federal Reserve Bank changed Goldmans status from investment bank to bank holding company on Sept. 21. That will not affect the agreement with ATS.
On Sept. 23, billionaire Warren Buffett announced he was investing $5 billion in Goldman Sachs through his company, Berkshire Hathaway Inc., which buoyed investor confidence at least temporarily.
ATS has undergone several transitions of its own since it was founded by Tuton in 1987 as American Traffic Systems, with its first cameras in the town of Paradise Valley. Tuton sold the company in the mid-1990s to Redflex Holdings Ltd.
Tuton and his brother, Adam, who serves as the companys chief operating officer and executive vice president, set out to re-create the company starting with electronic toll road applications. ATS incorporated the speed and red-light cameras into its business again and, along with Redflex, have dominated the U.S. market.
Goldman Sachs officials said they were drawn to ATS because of its focus on public safety and because the market isnt one that would be affected by fluctuations like a more consumer-oriented business.
With its growth prospects, the potential for an interconnected toll business and a solid management team in place, it was a good opportunity for Goldman Sachs.
The U.S. market is a pretty large market for them to be focused on probably for the next five to 10 years, said Raheel Zia, vice president of Goldman Sachs.
The firm had been looking to invest in a company in that market for 18 months to two years, and had been in discussions with ATS for some time.
How the cash infusion might change the dynamic of the ATS-Redflex battle remains to be seen. It will allow ATS to move more quickly to establish more communities in its network, as well as expanding its toll road program. Tuton said the investment gives ATS a new level of credibility, and having to search continually for financing in a tight credit market was not appealing.
I think were grateful that we dont have to concentrate on the debt market, he said.
Tuton also stressed the investment was not part of a company exit strategy. It represents a minority stake, he said, and the management team will remain.
ATS could see more revenue from its toll business soon. It has contracts with Avis Rent a Car System LLC, Hertz Corp. and Budget Rent A Car System Inc. to use its PlatePass system to allow drivers in certain states to pay for tolls automatically. They recently signed Advantage Rent A Car to the same system.
The company now is looking at an interoperable network that would allow drivers to pay tolls on any road without stopping. A commercial version will be available for drivers sometime next year, Tuton said.
Our time has come, and I think its a great time to be in this space right now, he said.
The court's reasoning was pretty good.
That's all it is about. And half of the money from each ticket goes to the company behind the boxes.
Wonder who gets lobbyist money for this racket.
I can already do this with my EZ-Tag.
The big scam is that publicly created highways are being turned into toll roads. And in some instances the toll gates are being sold to private and even foreign concerns (for short term budget boosts).
Has there been any evidence explaining how these cameras are daily calibrated for accuracy? Radar evidence is inadmissible here unless the daily calibration is documented.
So now you can see the reason for the shotgun in the truck!
(Can’t hit squat driving at 75 with the AR.)
I hate to burst their bubble, but Arizona is getting rid of this, as it has cost them millions in negative cash flow.
I would never consider civil disobedience of the sort facilitated by a used tire, a pint of gasoline, and a match. And not when it’s dry.
Since the machines are independently operated and owned and not government property, the court ruled that any statement about the accuracy of the depictions of the pictures is inadmissible hearsay as it lacks foundation. The only way to get around it would be for the company (which is located in Arizona) to have someone come in and testify as to the accuracy of the machines, the calibration and the method of collecting the evidence and then be subject to cross examination.
I think this case spells the end of these independent speed camera companies in California. They will likely have to sell the cameras and equipment to the cities and counties and let them operate it so that they can have a live witness to lay the foundation for the admissibility of the photographs at each and every trial in which they are going to be offered.
My feeling is that Goldman Sachs just made a terrible investment.
Of course3 Gov’t Sach will put the money into getting legislation passed where the camerals have a better footing. Since GS has ties to insurance companies, you can see them steering legislation where violation points are assessed for camera tickets.
> My feeling is that Goldman Sachs just made a terrible investment.
That’s right...they will not renew their contract and the cams will come down around July 15th.
You know, I would rather pay a toll than talk to some sorry-ass cop.
All roads are toll roads now. The tolls are just selectively, rather than universally collected.
I would rather have to deal with tolls than officer friendly.