Used with permission
NEW YORK (Standard & Poor's) May 13, 2003— Standard & Poor's
Services said today it placed its 'CCC' corporate credit and
secured bank loan ratings of Rent-Way Inc. on CreditWatch with
"The CreditWatch placement is based on the company's
announcement that it
plans to offer $215 million of senior secured notes together
proposed new revolving bank credit facility," stated Standard &
credit analyst Robert Lichtenstein.
The proceeds will be used to refinance the company's existing
that matures in December 2003, eliminating a significant
concern. Moreover, Rent-Way's settlement of its accounting
subject to the bank loan refinancing by July 31. The Erie,
company had $213 million of debt outstanding as of March 31,
Upon completion of the deal, Standard & Poor's will raise the
credit rating to 'B+' from 'CCC'. In addition, Rent-Way Inc.'s
$60 million secured bank loan will be assigned a 'BB-' rating,
proposed $215 million senior secured notes will be assigned a
The outlook will be stable. The ratings are based on preliminary
information and are subject to review upon final documentation.
adverse outcome of the SEC and the U.S. Attorney investigations
factored into the rating.
Rent-Way's senior secured notes rating will be rated 'B-', two
lower than the corporate credit rating, reflecting a material
secured debt that is better positioned than the senior notes.
the new notes are only secured by a second priority lien, and
to be disadvantaged because they lack sufficient asset
The $60 million revolving credit facility will be rated 'BB-',
higher than the corporate credit rating, based on the strong
full recovery of principal in the event of default or
facility is guaranteed by Rent-Way and its wholly owned
Rent-Way is the second-largest operator in the retail
industry. The company faces significant challenges competing
Rent-A-Center (34% market share versus 10% for Rent-Way), a firm
stronger sales, operating margins, and financial flexibility.
Complete ratings information is available to subscribers of
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
under Fixed Income in the left navigation bar, select Credit
RTO Online is the official channel for Rent-to-Own Industry News and the
only independent source of news for the rent-to-own, rental-purchase,
lease-purchase trade. RTO Online (Rent to Own Online) represents the choice
of the entire RTO Industry for trusted information, as it happens.
Tell us what you think
Rate the article at the top of this page