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Rite Aid to issue new debt, refinance credit
August 9th, 2010
CAMP HILL, Pa. – Rite Aid Corp. plans a $650 million debt offering and a new revolving credit facility to replace its current $1.175 billion revolver.
The drug store chain said Monday that it aims to offer $650 million in senior secured notes due in 2020. Plans call for the proceeds of the offering, along with available cash, to be used to repay and retire a $648 million term loan due in 2015 under its senior secured credit facility, as well as to fund related fees and expenses, according to the company.
Rite Aid also said it plans to replace its existing $1.175 billion revolving credit facility due in 2012 with a new $1.175 billion revolver due in 2015. The company reported that as of Aug. 6 it had obtained $1.115 billion in commitments.
The new revolver is slated to have reduced pricing and a five-year maturity, although its maturity will be April 18, 2014, in the event that Rite Aid does not repay, refinance or extend the remaining term loans under its senior credit facility prior to that time and meets certain other conditions, according to the company.
In addition, Rite Aid stated in a Securities and Exchange Commission filing that it's seeking amendments to provide more flexibility under certain covenants in its senior credit facility, including revisions to the fixed-charge coverage ratio test and to permit the mandatory repurchase of its existing 8.5% convertible notes due 2015, subject to the satisfaction of certain conditions.
And as part of the offering of the notes, Rite Aid reported in the SEC filing that it has previously repurchased about $93.8 million of its outstanding 8.5% convertible notes due 2015, with cash on hand, subsequent to the completion of its fiscal 2011 first quarter.
Last year, Rite Aid had made a number of key moves to refinance its debt and shore up its credit, putting it on firmer financial ground so it could concentrate on improving store operations and ramping up sales.
In October, the company announced a plan to offer $270 million of senior secured notes due in 2019, increase the borrowing under an existing $525 million term loan due June 2015 and raise the maximum borrowing capacity for its revolver to $1.175 billion. With the completion of the plan, the retailer refinanced all of its September 2010 debt maturities.
And in July, Rite Aid said it obtained a commitment from GE Capital for $290 million of new money for a $1 billion asset-based revolving line of credit. That came about a month after the company announced that it had wrapped up $1.9 billion in refinancing.