11/28/2017Duke University Increases Control Over Red Light Camera Company
Duke University and allies increase their control over photo ticketing vendor Redflex Traffic Systems.
Each time a red light ticket is issued in Plano, Texas or Tacoma, Washington, Duke University pockets a slice of the profit. The Australian Securities Exchange announced on Monday that the university's endowment fund had increased its stake in controversial photo enforcement vendor Redflex Traffic Systems. After picking up an extra 4.2 million shares of the Australian firm's rapidly falling stock, Duke increased its direct voting power to 13.2 percent.
Desperate for cash, Redflex asked existing shareholders earlier this month to buy new shares in the company at a discounted price. The move was intended to raise $16.4 million, but shareholders ultimately chipped in just $9.4 million. The stock plunged 15 percent last week on news of the disappointing result.
Investors have been wary, as Redflex continues to lose cash -- $37.6 million last year alone. The firm was forced to pay the first installment on a $20 million fine after it was caght defrauding Chicago, Illinois. Several municipal customers have distanced themselves from Redflex, finding it politically untenable to do business with a vendor whose top US employee, Karen Finley, is currently serving time at a federal prison in Phoenix, Arizona.
Other cities have decided to drop photo ticketing for other reasons. Rochester, New York, for example, found no evidence of a safety benefit from automated enforcement.
"The red light camera program has been wildly unpopular among Rochester's citizens, and its benefits simply do not justify a further extension," Mayor Lovely A. Warren explained in a statement. "I am particularly concerned that too many of these tickets have been issued to people who can least afford to pay them, which is counterproductive to our efforts to reverse our city's troubling rates of poverty."
Duke maintains close ties with Redflex chairman Adam L. Gray, who last week boosted his stake in Redflex to 25 percent through Coliseum Capital Management. In 2010, Duke's investment arm forced the Japanese restaurant chain Benihana to put Gray on its board as part of a plan to wrest control of the steakhouse from its family owners.
Redflex management has been fighting against takeover attempts ever since it rejected Macquarie Bank's offer to buy the firm for $2.75 per share in 2011. Redflex stock is currently trading at 50 cents a share.