05-25-02
RTO Online
Earlier this month, Rent A Center announced a secondary
offering of 3.5 million shares. These shares are being sold by Rent A
Center's largest stake-holders, affiliates of Apollo Advisors IV and Bear
Stearns. The selling stockholders currently own over 30% of Rent-A-Center stock.
This sale represents 1/3 of their holdings. They will still control nearly 21%
of the company.
The selling stockholders have granted the underwriters,
SunTrust Robinson Humphrey and Wachovia Securities, the right to acquire up to
an additional 468,000 shares of common stock to cover over-
allotments.
Morgan Stanley will act as the book-running
manager for the offering.
Rent A Center stock closed Wednesday at $61.53. Morgan
Stanley announced late Wednesday that the offering price was set at $61 per
share with a gross spread of $3.05. On Thursday, 2.8
million Rent A Center shares traded hands (over 8 times avg volume) and the
stock closed down 4% at $58.85.
In light of recent stock offerings by other Rent to Own
companies, it is important to note that this is not a new stock issue. Rent A
Center will receive no proceeds from this sale.
end
Spread
The difference between the price of a stock paid by the underwriter and the offering price charged to the public. This is the compensation that the underwriters receive.
Underwriter
An intermediary between an issuer of a security and the investing public, usually an investment bank.
Secondary Offering
A registered offering of a large block of a security which has been previously issued to the public, by a current shareholder. The proceeds of the sale go to the holder, not the issuing company, and the number of shares outstanding does not change. also called secondary distribution.
Over-allotments
In an offering, the sale of more securities than are available, in anticipation that some orders may not be confirmed
Book
A chronological record of a specialist's inventory of securities and orders that other exchange members have placed with the specialist. also called specialist's book.
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