Private Investors Warm Up to Good Guys!

Wall Street has held a dim view of the good guys! Inc. senior management team since its founder and Chief Executive, Ron Unkefer, retired from the company in 1993.

The consumer entertainment electronics retailer, which went public in 1986, saw its stock drop to below $3 per share last year. Last June, Unkefer was given a 10% equity stake in the good guys! to rejoin the company as CEO.

His first order of business was to raise cash from the private market. On Aug. 20, the company sold 3.25 million shares of common stock for $5 per share to mostly institutional investors. The San Francisco-based company also issued warrants exercisable for three years to purchase an additional 1.625 million common stock for $6.125 per share. the good guys! now has a total of 19,597,333 shares of common stock outstanding.

Morgan Keegan & Co. of Memphis, Tenn., placed the deal and received a fee of $900,000 as well as a three-year warrant to purchase 160,000 shares of common stock at $6.125 per share.

“A public offering would have been a three to four month process, which would run at the same time we were doing a complete overhaul of the company,” Unkefer said. “A private offering was less disruptive and will allow us to get our financial house in order before the holiday season.”

Good guys! operates 79 stores in California, Nevada and the Pacific Northwest. Unkefer said the company will develop an Internet presence once it straightens out its core businesses.

“The company should not focus on 30 different things at once,” said Morgan Keegan research analyst David Childe. “It is incumbent upon management to attack the problems associated with its stores.”

Unkefer and Childe attribute the company’s decline to a shift from selling high-end consumer electronics to offering lower-end products and profit-lagging personal computers.

“The company always had a focus on the mid to high-end portion of the market,” Unkefer said. “That got dissipated while I was away, and we are in the process of getting that back.”