S&P: Rent-Way on positive watch

Standard & Poor's said it placed its debt ratings, including its B+ corporate credit rating, on Rent-Way Inc. on CreditWatch with positive implications.

S&P added that the rating action follows the announcement that the company has reached a definitive agreement to be acquired by major competitor Rent-A-Center Inc. for about $567 million, adding that this represents an approximate 9.5 times multiple of Rent-Way's estimated 2006 EBITDA.

Although the BB+ ratings on Rent-A-Center are on CreditWatch with negative implications, the agency said it does not expect that any downgrade for the acquiring company will still leave the rating above the current rating for Rent-Way.

S&P added that it will consider the impact of the acquisition on the combined company's credit profile, including the integration of poorer performing Rent-Way stores, the opportunity for cost savings through the elimination of redundant expenses and store closures and the increase in debt leverage.

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