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Rite Aid to offer notes as part of refinancing
June 8th, 2009
CAMP HILL, Pa. – In line with a previously announced refinancing plan, Rite Aid Corp. aims to offer $400 million in senior secured notes due 2016.
The drug store chain had said it planned to refinance some debt maturing in September 2010. The refinancing also includes a new $525 million term loan due June 2015, which the company said is $125 million more than previously announced.
Proceeds from the new loan will be used to refinance a $145 million term loan due September 2010, repay and cancel a portion of the outstanding commitments under a $1.75 billion senior secured revolving credit facility also due September 2010, and to cover fees and other expenses, according to Rite Aid.
Also as part of the refinancing, Rite Aid plans to enter a new $1 billion senior secured revolving credit facility due September 2012. The company said that so far it has obtained $900 million in commitments.
Plans call for the net proceeds from the offering of the notes, along with borrowings under the new revolver, to be used to repay the remaining amounts outstanding and replace Rite Aid's existing revolving credit facility, as well as fund related fees and expenses, the company reported.
Rite Aid has been working to shore up its liquidity as it weathers a rough sales climate, rising competition and the integration of Brooks Eckerd stores.
The drug chain posted virtually flat same-store sales in May, up 0.6% year over year. Total sales for the five weeks ended May 30 slipped 1.3% to $2.51 billion.
And in April, the company reported net losses of $2.3 billion for its fiscal 2009 fourth quarter, which included significant noncash charges from impairment and writedowns, and $2.9 billion for the year ended February 28.
In a conference call with financial analysts after releasing the quarterly and year-end results, Rite Aid outlined initiatives designed to bolster the company’s operating results. Key projects include store segmentation and associated store operating models, SKU optimization, distribution network consolidation, private label expansion and a pharmacy loyalty program.