RTO Enterprises Inc. announced today that it is refinancing the $4 million, 22% subordinated debentures which were issued on February 1, 2001 as part of the
Company's restructuring plan.  The terms of the refinancing are considerably more attractive to the Company and its shareholders than the current facility, and have been approved by the independent directors of the Company.  The refinancing will save the Company approximately $500,000 per annum in interest expense.

$1.5 million of the subordinated debentures will be redeemed through a draw-down of the Company's bank revolver which bears interest at 2.5% above prime.  The remaining $2.5 million is being refinanced through a private placement of 12%, non-voting, non-convertible preferred shares which are redeemable without bonus or penalty subject to certain banking covenants being met.  The transaction will strengthen the Company's balance sheet as
$2.5 million of debt will be replaced with $2.5 million of equity. 

Rockwater Capital Corporation (formerly McCarvill Corporation) owns $2.9 million of the 22% subordinated debentures.  If this debenture is not redeemed by February 1, 2003, RTO would be required to pay a $1 million penalty and an additional 50,000 warrants held by Rockwater Capital Corporation would vest.  The Rockwater debenture will be redeemed upon closing of the refinancing. The Chairman of RTO Enterprises Inc., Donald K. Johnson, owns the remaining $1.1 million of the subordinated debentures.  If this debenture is not redeemed by February 1, 2003, an additional 19,000 warrants held by Mr. Johnson would vest.  Of the $2.5 million preferred share issue, Mr. Johnson is reinvesting the proceeds from his debenture into $1.1 million of preferred shares, with the remaining $1.4 million being purchased  by the Company's senior management team.   Participants include David Ingram, President & CEO and a director of the Company, Bill Johnson, Executive Vice President and Chief Financial Officer, Randy Robertson, Senior Vice President, Operations, David Maries, Vice President, Marketing and Merchandising, Rick Atkinson, Vice President, Real Estate Development, Simon Holmes, Divisional Vice President, and Loraine DeGraaf, Controller. 

The Company's banker has agreed to permit the Company to draw down $1.5 million on the bank revolver to repay the subordinated debentures, conditional on the remaining $2.5 million of the debentures being refinanced through the preferred share issue.  The Company requested that Mr. Johnson reinvest the proceeds of the redemption of his $1.1 million debenture in an equivalent
amount of preferred shares to facilitate the refinancing.  As for the balance of the $2.5 million preferred issue, it was offered to senior executives of the Company because of the important time constraints to avoid the $1 million penalty to Rockwater Capital Corporation, the vesting of 50,000 warrants held by Rockwater and the vesting of 19,000 warrants held by Mr. Johnson.  In addition, the board of directors believed that there would be limited interest in the preferred share issue from other investors because there is no market for the shares and they are redeemable without bonus or penalty at the Company's option.  The costs of the transaction are not expected to be significant.  The Company is not financing either directly or indirectly, the purchase of the preferred shares by management.

The transaction is expected to close before the end of November, 2002.

David Ingram, President and CEO, stated: "The terms of the refinancing are in the best interests of the Company, its customers, employees and shareholders.  We save substantial annual interest expense, have strengthened our balance sheet and still have flexibility to redeem the preferred shares without bonus or penalty."

Bill Johnson, EVP and Chief Financial Officer, commented: "We are extremely pleased to bring to fruition the refinancing of the Company's costly subordinated debt.  The refinancing is expected to reduce our overall weighted average cost of debt and preferred shares by approximately 3% and our total funded debt outstanding by $2.5 million."

Donald K. Johnson, Chairman of the Board added:  "The financial commitment to RTO by our senior management team demonstrates their confidence in the Company's financial strength and future growth potential.  It is encouraging that the senior executives of a public company are providing funding on terms that are beneficial to both the Company and all its shareholders."

RTO Enterprises Inc. is in the business of renting, with or
without an option to purchase, brand name home entertainment
products, appliances and household furniture across Canada.
Currently, the Company owns and operates 134 stores in 80 cities
and towns in all ten Canadian provinces.