NEW YORK (Standard & Poor's) Standard & Poor's Ratings Services said yesterday that it raised its corporate credit rating on Rent-Way Inc. to 'B+' from 'CCC'.

The rating was removed from CreditWatch where it had been placed May 13, 2003. The outlook is stable.

In addition, Standard & Poor's assigned its 'BB-' rating to the company's $60 million senior secured bank loan, and its 'B-' rating to $205 million senior secured notes. The bank loan rating continues to be preliminary and is subject to review upon final documentation. The Erie, Pa.-based company had $213 million of debt outstanding as of March 31, 2003.

"The rating action is based on the successful refinancing of the company's bank loan that was to mature in December 2003, eliminating a significant near-term concern," stated Standard & Poor's credit analyst Robert Lichtenstein. A material adverse outcome of the SEC and the U.S. Attorney investigations are not factored into the rating.

Rent-Way's senior secured notes are rated 'B-', two notches lower than the corporate credit rating, reflecting a material amount of secured debt that is better positioned than the senior notes. Furthermore, the new notes are only secured by a second priority lien, and are deemed to be disadvantaged because they lack sufficient asset protection.

The ratings reflect the company's participation in the highly competitive and fragmented rent-to-own retail industry, the negative impact of accounting irregularities on the company over the past several years, and a highly leveraged capital structure. These risks are somewhat offset by the company's established position in its sector and operational restructuring that has recently improved operating performance and strengthened financial controls.

The refinancing will improve the company's financial flexibility significantly because maturities are extended and there are no amortizations. The $60 million revolving credit facility matures in 2008 while the $205 senior notes mature in 2010.

Liquidity is limited to about $10 million in cash and about $20 million of availability on the revolving credit facility. Standard & Poor's expects that operating cash flow and the company's revolving credit facility will be Rent-Way's primary sources to service its debt and fund its capital expenditures.

The stable outlook reflects Rent-Way's improved liquidity position after refinancing its bank facility and paying down debt from the proceeds of the Rent-A-Center sale. Still, the company's highly leveraged capital structure and the challenge of improving operations in the competitive rent-to-own retail industry could hinder progress.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.