update:2:25pm; Rent Way stock is up over 6% on the news of a possible end to the suit

update: Rent Way stock closed up 8.3% at below average volume

Rent-Way, Inc. announced that it has reached an agreement in principle to settle the consolidated class action pending against it in the U.S. District Court for the Western District of Pennsylvania.

The suit claimed that Rent Way's 1998, 1999 and 2000 financial statements were materially false because of accounting irregularities. Rent Way eventually restated results by $129 million.

Under the settlement, Rent-Way will pay $25 million to the class, consisting of $21 million in cash, $11 million of which is expected to be funded from available insurance proceeds, and $4 million in two year 6% subordinated, unsecured notes. The settlement is subject to negotiation of a final written settlement agreement and Court approval, and is conditioned on a refinancing or restructuring of the Company's outstanding bank debt on or before July 31, 2003. As of December 31st, Rent Way reported $285 million in debt, with effective interest rates over 15%.

William E. Morgenstern
Chairman and CEO
"This settlement is an important step forward for Rent-Way. We are now better positioned to refinance our outstanding bank debt on more favorable terms. This will allow us to execute our business plan at a significantly lower cost."

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