05-16-02
RTO Online

Aaron Rents filed a form 'S3' today announcing it's intention to sell 2,000,000 shares of common stock in a new offering. The actual figure is 2,300,000 shares. The additional 300,000 shares are optioned to the underwriters to cover 'over-allotments'.

Of the 2,000,000 shares offered, 1,500,000 shares are being sold by the company. 500,000 shares are being sold by the companies Chairman and CEO, R. Charles Loudermilk Sr.. The CEO's sale of 500,000 shares will reduce his common share holdings by 25%. Mr. Loudermilk will still own over 63% of Aaron Rents Class A (voting) stock. The company will not receive any proceeds from the sale of 500,000 shares by the CEO.

The estimated offering price per share is $28.30. Aaron Rents stock closed yesterday at $28.35. At the time of this writing, Aarons shares are trading down 3.21% at $27.44.

The company estimates net proceeds from the sale of these shares will be   $40.0 million after deducting the underwriting discounts and estimated offering expenses. If the underwriters exercise their option to purchase an additional 225,000 shares to cover over-allotments, net proceeds will be approximately $46.0 million.

$38.7 million will be used to reduce outstanding bank debt. The remainder will be used for working capital needs and possible payments to terminate interest rate swap agreements.

According to the filing, Aarons debt after the $38 million reduction, will be only $15 million. For those of you paying attention...that's only $40,000 per store!. For comparison, Rent a Center and Rent Way carry avg debt of over $250,000 per store.

Aaron Rents has a credit line of $110 million. This transaction will leave $95 million of available credit at very attractive rates for, what will most likely be, an accelerated store opening program.

Access the actual filing here

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