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Refinancing costs lead Rite Aid to lower 2010 guidance
June 24th, 2009
CAMP HILL, Pa. – Due to additional refinancing expenses, Rite Aid Corp. has raised its projected net loss for its current fiscal year.
In reporting first quarter results on Wednesday, Rite Aid forecast a fiscal 2010 net loss of $265 million to $490 million, or 33 cents to 59 cents per diluted share. In April, the company had projected a fiscal 2010 net loss of $210 million to $435 million, or 26 cents to 53 cents per diluted share.
As of Wednesday morning, Wall Street analysts forecast a loss of 35 cents to 53 cents per share for Rite Aid's fiscal 2010, with an average estimate of 42 cents, according to Thomson Financial.
The drug store chain announced earlier this month that it had completed the refinancing of a portion of its September 2010 debt maturities as part of a comprehensive refinancing plan launched in the first quarter.
With the refinancing, the company said fiscal 2010 interest costs stand to rise by $55 million, which was not included in its fiscal 2010 guidance.
Specifically, Rite Aid said it has completed the refinancing of a $145 million term loan and part of a $1.75 billion senior secured revolving credit facility with new facilities that include a $525 million term loan due June 2015 and $410 million of senior secured notes due June 2016.
The company added that it also has received commitments for $960 million of a proposed new $1 billion senior secured revolving credit facility due September 2012, which is slated to be used to refinance the rest of its current revolver.
In its first quarter report, Rite Aid noted that it generated positive cash flow from operations of $357.6 million versus a net use of cash of $105.3 million in the year-ago period. Also, net cash from operations, including inventory reduction, and reduced capital expenditures contributed to the availability of $901.8 million under the revolver at the quarter's end, the company said.
“We are in a much stronger financial position today with the significant improvement in cash flow and liquidity we achieved in the first quarter and the progress we have made refinancing a major portion of our September 2010 debt maturities,” Rite Aid chairman and chief executive officer Mary Sammons said in a statement.
“The increase in liquidity gives us ample funds to execute our business plan, and the extended maturities give us more time for our initiatives to continue to improve our performance," Sammons explained. “We are not just changing our business to weather the current economic storm. We are changing the way we operate for the long term.”
MORE RITE AID COVERAGE
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