08-23-02
RTO Online
Aaron Rents has reached agreement in principle to acquire Oklahoma based
retailer Sight'n Sound for $12 million cash. Sight'n Sound operates 26 retail
locations in Oklahoma and Kansas with annual revenue of $60 million.
2.4 times monthly revenue for an established retailer could legitimately be
described as a fire sale. We have been unable to pin down the current financial
condition of Sight'n Sound, but the purchase price alone would indicate it is
troubled at best. The purchase price is essentially for inventory and lease
obligations.
In a surprising twist, Aaron Rents will continue to operate the stores as retail
locations under the Sight'n Sound banner. Aaron's trademark 'Lease Ownership'
transaction will be added to the stores lineup as a consumer option.
While many Rental Purchase dealers offer Retail options, the reverse is
exceedingly rare.
Charles Loudermilk, Sr.
Aaron Rents CEO
"We consider this to be a test as to whether we can acquire a traditional
retailer and expand its business through offering to customers the sales and
lease ownership financing transaction. If we are successful, then it opens up
much larger opportunities for the Company's future expansion.
Such a direct blending of Retail and Rental Purchase, if successful, may not be
welcome news for independent dealers who don't relish the thought of competing
with traditional retailers for the rent to own consumer.
Aaron Rents issued a statement saying that, although revenue will increase,
they do not expect the acquisition to have a material effect on projected
earnings. Guidance of $1.27 to $1.32 per diluted share for 2002 will remain
unchanged.
Just days ago,
Aaron
Rents announced a $50 million private debt placement at very attractive
rates. The additional financing will be used to payoff existing debt and finance
an aggressive growth strategy.
In a recent interview with RTO Online, newly appointed Senior Group VP was
asked..."What is your vision for the future of Aaron Rents"?
James L. Cates
Senior GVP
"Growth...and lot's of it"
read entire article here
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