Spokanes Pawn 1 chain to launch private offering
$1 million placement would finance 10 new stores, development of headquartersApril 20th, 2000
Pawn 1 Inc., the Spokane-based pawn shop chain that has more than doubled in size over the last five years, says it soon will seek to raise $1 million from private investors to use for general working capital and further business expansion. That expansion is likely to include the opening of 10 more stores out of town and a new headquarters here.
Lewis Rumpler, Pawn 1s CEO, says the company expects to launch within the next week or two a private placement of equity to raise the $1 million and hopes to have the offering fully subscribed within 90 days. The company has been granted licenses by state regulatory agencies to solicit investors in Washington and Idaho, and now is preparing memorandum and subscription documents that are needed to proceed with the unregistered offering, he says.
Rumpler describes the private placement as a first round of financing, and says a possible second round, targeting institutional investors, could be held within two to three years, although those plans are indefinite.
The initial cash infusion alone should give Pawn 1 enough capital to open 10 more stores over the next two years, as outlined in the companys business plan, he says. Pawn 1 currently operates nine stores, six in the Spokane area and three in North Idaho. It plans to open five more stores in its next fiscal year, which begins July 1. Those stores, in order of anticipated opening, are to be located in Lewiston, Moscow, and Sandpoint in North Idaho, and the Boise-Nampa-Caldwell area in Southern Idaho, Rumpler says.
Most of our expansion plans are outside the Spokane metropolitan market, he says.
One potential piece of the company expansion that could occur here within the next year or so is the development of a new multipurpose facility in Airway Heights that would serve as Pawn 1s headquarters and also include training space and a retail store.
As envisioned, that building would be a two-story structure, with about 6,000 square feet of space on each floor plus a full basement, and would cost around $500,000 to construct, Rumpler says. It would sit on a 30,000-square-foot parcel along U.S. 2, between a McDonalds restaurant and a Napa Auto Parts store. Pawn 1 bought the property about a year and a half ago.
The planned development site is a relatively short distance from where the Kalispel Indian tribe is getting set to build a $17 million, 60,000-square-foot casino. Pawn 1 would like to coincide its project there with the opening of the casino, Rumpler says.
Pawn 1s corporate offices currently are located on the fourth floor of Old City Hall, at 221 N. Wall downtown. The company employs about 55 people, most of them full time, but expects to add about five more employees with the opening of each new store, which means it potentially could add 25 employees or more over its next fiscal year.
Pawn 1 is owned by Mark Lax, president; his cousin, Mark Silver, vice president of store development; and Rumpler, a family friend who was promoted to CEO in January after having served as the companys chief financial officer since 1995. Rumpler helped devise an aggressive business plan aimed at expanding the small chain, and the company has opened six stores since implementing the plan.
As part of that strategy, it also has taken a number of steps aimed at developing a stronger corporate structure, creating a more upscale, customer-friendly atmosphere in its stores, and banishing the traditional, negative image of pawn shops. For example, it has computerized store operations, strengthened credit relationships with local bankers, improved employee training, and sought to create a singular marketing presence for its stores by adopting the Pawn 1 name and an identifying logo.
The company, which operated originally under the name Marks Brothers Inc., opened its first store, Empire Jewelry, in 1979.
The demand for pawnbroking services jumped dramatically during the early 1990s, due to changes in the national economy, and remained strong for most of the decade, Rumpler says. That demand began to soften about a year and a half ago, due apparently to the healthy economy, which has left fewer people struggling financially and in need of occasional small, short-term loans, he says. He adds, however, that demand for such loans has been picking up again over the last three months, signaling that the economic boom may be winding down.
Pawn 1 also is one of a number of companies that has gotten involved in the payday loan business here, which has grown rapidly over about the last 18 months. Payday loan centers grant small loans to customers who need money in between paychecks. Such loans are repaidwith intereston the customers next payday.
Rumpler says payday loans now make up about 10 percent of Pawn 1s total loan volume, but he doesnt see that figure growing much, due to the saturated market here, which he says probably is destined for a shakeout.