TRM Corp., a Portland, Ore.-based ATM ISO, faces a shareholder lawsuit and a new stock-trading venue as the company tries to recover from financial turmoil.
TRM's saga was one of the big stories in recent months among ATM ISOs. Two weeks after TRM's auditor, McGladrey & Pullen LLP, questioned whether the company could continue operating, TRM's management announced a deal that raised the company from near demise.
TRM purchased Access To Money, the nation's seventh-largest ATM ISO in April for $15 million from LJR Consulting Corp., a Whippany, N.J.-based company that does business as Access To Money.
TRM paid part of the purchase price with $11 million borrowed from LC Capital Master Trust.
Access To Money had 5,000 ATMs in 2007, the same as in 2006, according to the 2008 edition of the ATM&Debit News EFT Data Book, an ISO&Agent Weekly sister publication.
After the purchase of Access To Money, TRM said its portfolio contained approximately 12,200 transacting ATMs. At the end of 2007, TRM reported having 10,253 ATMs, down from 12,378 in 2006.
At the same time TRM was announcing the good news, dark clouds appeared on the horizon.
The Nasdaq Global Market delisted TRM's stock because it was trading below $1 per share for more than a year. To remain listed on Nasdaq, stocks must trade above that price.
TRM's stock now trades on the Pink Sheets LLC, an electronic-quotation service, where broker dealers buy and sell company shares.
The delisting was the first shoe to drop. The second was a class-action shareholder lawsuit.
TRM's shareholders are alleging that the company's previous managers deceived them about the company's financial health.
Shareholders filed the lawsuit against TRM May 23 in U.S. District Court in Portland, Ore. The complaint covers shareholders who purchased TRM stock between March 16, 2006, and May 22, 2007. "The defendants issued positive statements about the company's financial health and performance," says Coughlin Stoia Geller Rudman & Robbins LLP, a San Diego law firm representing the plaintiffs.
The plaintiffs allege the defendants failed to disclose that the company lacked adequate internal controls and inflated financial results and that the company's ability to continue operating as a viable business was in doubt.
The lawsuit named as a defendant Jeffrey Brotman, TRM president and CEO until June 2007. In addition, the lawsuit named Kenneth Tepper, whom Brotman replaced, and Daniel E. O'Brien, TRM chief financial officer from August 2004 to August 2007. Richard Stern, TRM president and CEO, would not comment on the complaint.
Another recent ATM ISO sale involved Payment Alliance International's purchase of ATM Express Inc., a Billings, Mont.-based ATM-management company, for an undisclosed price.
With the purchase, Payment Alliance controlled more than 26,000 ATM-management contracts nationwide, says Donna Embry, the Louisville, Ky.-based company's senior vice president of development.