YOUR BUSINESS AUTHORITY
Springfield, MO
by Karen E. Culp
SBJ Staff
Shareholders in O'Reilly Automotive will hear a lot of good news at their annual meeting May 4. In addition to O'Reilly's first quarter 1999 gross profit increase of 40 percent, the company can boast of paying down a great deal of its debt with a secondary stock offering of 3 million shares.
The offering raised about $129 million.
The Springfield-based publicly held company recently completed a successful "road show" during which the company pitched its shares to major fund managers and other potential shareholders, said James Batten, vice president of finance and chief financial officer for O'Reilly.
"Our road show was very successful. We were able to place our whole offering, and we came really close to placing at the market price for that day. We were also able to place the offering in the hands of good shareholders, the kinds of long-term investors who have a strong interest in the company," Batten said.
O'Reilly decided on the secondary offering to pay down some of its debt in order to free up assets for greater expansion. In January of 1998, O'Reilly acquired Hi/LO Automotive for $49.3 million, acquiring Hi/LO's $43.2 million existing debt.
Though the company had worked to keep its own debt low, O'Reilly also had its own debt, and the Hi/LO debt made the amount O'Reilly owed too high, Batten said.
"We were in a situation where we were at our upper limit on credit capacity. We needed to either increase our borrowing capacity or decrease debt. We chose this secondary offering as a means to decrease our debt and put us in a better position for future expansion," Batten said.
The effect of the offering can be seen in the company's financial statement.
In its Dec. 31 statement, the company reported $1.72 million in cash assets, compared to $3.23 million March 31[[In-content Ad]]
A franchise store of a Branson West-based quilting business made its Queen City debut; Grateful Vase launched in Lebanon; and Branson entertainment venue The Social Birdy had its grand opening.
$2M in tax credits awarded to SWMO nonprofits
Baldwin, Lathan to chair United Way campaign
Produce recall impacts food sold at Walmart, Aldi and Kroger
Mixed-used development proposed in KC area
Tax deduction program for farmers set to launch
Report: Panera explores sale of Caribou Coffee, Einstein Bros Bagels