The future of the second largest rent to own company in the nation hinges on CEO Bill Morgenstern's ability to refinance the company's 15% debt.

Yesterday, the company announced a $25 million settlement of the class action lawsuit brought by shareholders. The settlement must be given final court approval and is contingent upon the long sought after refinance.

The suit was filed by shareholders after the announcement of 'accounting irregularities' that resulted in RWY losing 80% of it's value in a single day.

Rent Way eventually restated results by $129 million. Mathew Marini, former CFO was fired, and Jeff Conway, former president and COO was forced to resign. Federal investigations are ongoing.

 Bill Morgenstern, unlike CEO's of other companies under similar circumstances, remains at the helm. He maintains that he had no knowledge of the bogus accounting. The Board of Directors apparently agrees and have maintained their support for Mr. Morgenstern during the 2 year ordeal.

Company officials admit the absolute necessity of refinancing the overwhelming debt load. In December, Bill Morgenstern said that his "ambition" was to have re-finance complete by March 31st.

Bill Morgenstern
CEO
12-19-02
"No one knows what tomorrow brings, but our ambitions are to have the re-finance in place by the end of next quarter"
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In early January, S&P lowered Rent Way's credit rating based on concern about Rent-Way's ability to refinance its bank loan that matures in December 2003, and the uncertain outcome of federal investigations and class action lawsuits against the company.

The next few months will tell the tale. As of December 31st, the company reported $285 million in debt. If the company is able to refinance at a reasonable rate, the future looks bright, if not...lenders may receive a 15% equity stake in the company, causing further dilution of shares, and the class action settlement announced yesterday would likely go back to the drawing board.