In April 2002, Rent Way entered into a PIPE with Calm Waters Partnership, a Wisconsin based privately held investment company owned by Richard S. Strong. Shares issued under this type of agreement cannot be sold until a registration statement is filed with the SEC. That registration statement was filed today.

According to the terms of the April 2002 deal, Calm Waters acquired an aggregate of 1,000,000 shares of common stock for $6 per share, and warrants to acquire 100,000 shares. At the time, RWY was trading above $9 per share. (As of 10:50 EST today RWY was trading at $3.70)

The agreement also provided for the issuance  of an additional 333,000 warrants to acquire shares of common stock in the event Rent Way does not achieve a financial performance target for the twelve month period ending March 31, 2003. The precise details of the 'financial performance target' are unknown but include Rent Ways ability to refinance their debt at a 'more favorable rate'.

In the registration statement filed with the SEC today, Rent Way states that it does not expect to meet that target.

From SEC Filing
"...We do not expect to meet this target and therefore expect to issue the additional warrants on or about April 1, 2003. We expect the exercise price range of these warrants to be between $1.50 and $2.50 per share."

Definitions
PIPE, or 'Private Investment Public Equity'
When a private investment or mutual fund buys common stock for a company at a discount to the current market value per share. PIPEs are generally not looked upon favorably by investors because these transactions usually involve hedge funds, which are seeking a quick buck and are likely to sell the PIPE shares in the market causing the share price to drop. The issuing company can guard against this by delaying registration of the shares (see Registration below).
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Registration
Shares purchased must be registered with the SEC for the deal to be considered final. The shares cannot be sold until a registration statement is filed.
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