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hhgregg IPO Imminent; Chain Envisions 400 Stores

Indianapolis — hhgregg is about to offer 9.4 million shares in an initial public offering valued at $150 million.

According to a filing with the Securities and Exchange Commission, the regional brown- and white-goods retailer will sell 3.1 million shares and majority investor Freeman Spogli & Co. will contribute the other 6.3 million shares at a target price of $15 to $17 per share. The stock will trade on the New York Stock Exchange under the symbol HGG.

The chain will use its portion of the proceeds, estimated at $43.5 million, to pay outstanding debt. It also plans to increase its current line of credit from $75 million to $100 million and will enter into a new $100 million loan.

The IPO will launch “as soon as practicable,” the company indicated.

hhgregg first announced its plan to go public last April, two years after it was acquired by Freeman Spogli in a leveraged buyout. The recapitalization helped fuel new store growth and market expansion, and allowed family members to cash out their equity in the company, which was founded in 1955 by the Gregg and Throgmartin clans.

In the filing, the company indicated that net sales rose 17.7 percent to $1 billion during the full fiscal year, ended March 31. Same-store sales increased 5.5 percent during the period thanks to gains in video, majaps and mattresses. Net income rose 20 percent on a pro forma basis to $26.7 million.

The 79-store chain plans to open 13 to 15 new locations during the current fiscal year, primarily in Raleigh-Durham, N.C., and Birmingham, Ala., and will enter the Florida market in fiscal 2009. The retailer said it will continue to grow its store count over the next several years at a compound annual rate of 15 percent to 18 percent — paid for with internally generated funds — and believes it can ultimately sustain more than 400 stores in new and existing markets.