Pirates Raid on Brinks Promises More Upheaval in Credit Union Market

RICHMOND, Va. – A private equity fund called Pirate Capital launched a proxy contest yesterday aimed at forcing the sale of venerable bank security provider Brinks Inc., creating more turmoil in the market for credit union and bank services. Pirate, through one of its funds known as Jolly Roger LP, has accumulated an 8.5% stake in the 148-year-old cash carrier. In a letter to management yesterday the private equity fund urged Brinks management to give it two seats on the company’s 11-member board, where it plans to agitate for a sale of the company, according to a filing with the Securities and Exchange Commission. Pirate proposed that its founder Thomas Hudson and its general counsel Chris Kelly be named Brinks directors. Both Pirate, which has $1.7 billion in assets, and money manager MMI Investments, which has accumulated an 8.3% Brinks stake, have been calling on Brinks for the past few months to hire an investment bank to shop the company. The turmoil at Brinks, the provider of security services for thousands of credit unions, follows closely the sale of several leading outsourcers for credit unions, including Open Solutions, Digital Insight and John H. Harland Co. Brinks was founded in 1859 to transport bundles of cash from banks on horsecarts, with a shotgun-wielding guard sitting beside the horseman. The company reported a 60% drop in third quarter profits to $26.5 million, or 56 cents a share, from $65.8 million, or $1.15 a share, for the same quarter in 2005. Brinks shares rose yesterday after announcement of the Pirate raid to close at a new high of $65.12 on the New York Stock Exchange.