Hollywood Entertainment Corp. plans to raise $ 20 million to $ 25 million in a public offering of its common stock to largely finance its acquisition of the Video Central superstore chain.
Hollywood, a Portland, Ore., video rental company, said in September that it would buy the 33-store Video Central for $ 30.5 million from the H.E. Butt Grocery Co. in Texas.
The deal calls for full payment by March 25.
Hollywood said it would use existing cash to cover the difference between the offering’s proceeds and the purchase price. The company said tapping the stock market will allow it to go ahead with the acquisition without worries about building up its debt load.
“We prefer to finance the Video Central acquisition with equity instead of debt,” Hollywood chairman Mark J. Wattles said in a statement.