Bestway, the smallest of the 5 publicly held North American rent to own companies, will save over $770,000 annually by going private. Although not specified in yesterday's release, company officials say they have been working behind the scenes since 2002 on taking Bestway "to the Pink Sheets."

According to documents filed with the SEC, Bestway spends nearly $800,000 annually on compliance with the myriad government regulations surrounding public companies. In addition, the actual cost savings of being a non-reporting private company may be much greater than the historical out-of-pocket costs. New legislation will likely increase compliance burdens and company officials say this money is much better spent opening new stores.

Although rumors of an imminent buyout have persisted for years, and will doubtless increase with this latest announcement, Bestway officials say those rumors are unfounded. One said flatly, "We are not for sale." Taking the company private is one step in preparation for expansion as well as to help focus the company's leadership on its core business.

Bestway has spent the better part of two years undergoing a culture change. The company, under CEO David Kraemer (who's who), has streamlined all aspects of its operation and moved from a traditional rent to own model that maximizes turn on inventory, to one that maximizes customer satisfaction by lowering turn and increasing keep rate. A model that, largely due to the competitive affect of Aaron Rents, is becoming the way of the rent-to-own future. Even RTO giant Rent A Center is experimenting with the new model.

Rent a Center has been aggressively testing a reduced pricing structure in Oklahoma and Georgia (140 stores) since early summer. The test includes lowering rental rates and terms on the majority of merchandise, both new and used. Rent a Center hopes to learn if increased volume can "outrun" lower margins.

Some of the most obvious changes at Bestway are the 'Low Price Guarantee', and 12 month agreements on computers and other popular electronics. The companies current promotion is a Dell desktop computer at $99/month for 12 months and Big Screen TVs starting at $99/month for 24 months. Sources at Bestway say the gain in customers and agreements more than make up for the lower margin. Officials say customers are happier, more loyal, and less likely to hop to the competition at every promotion. Store level employees are trained to do "whatever it takes to compete," and it seems to be working. Bestway has reported eight consecutive quarters of increased same store revenues.

After being stuck at 69 stores since 2002, Bestway is expected to begin aggressively opening stores in '05. The target number of openings is unknown.

More information on "Going Private"
As a result of widespread accounting scandals in public companies in recent years, the government imposed strict guidelines for financial transparency. While a boon for accounting firms, the new guidelines imposed by the Sarbanes Oxley Act of 2002 have placed a big financial big burden on public companies. As a result, many small public companies are taking their firms off the public exchanges and trading privately. back to top

"Going Private" is when publicly owned stock in a firm is replaced with complete equity ownership by a private group. The firm is delisted on stock exchanges and can no longer be purchased in the open markets. Bestway will still be traded in "Pink Sheets." back to top

"Pink Sheets" are daily listings printed by National Quotations Bureau on a pink paper containing market maker quotes for over-the-counter securities not listed on any major market. They are published for brokers and market makers, not for general public. Most companies listed on Pink Sheets are very small, are thinly traded, and have small outstanding volume. Bestway's average volume is 131 shares per day (for comparison, Rent a Center's avg volume is 811,000 shares per day). back to top