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PHILADELPHIA — Rite Aid Corp. on Sunday announced that it has filed for Chapter 11 bankruptcy protection as part of a voluntary restructuring plan that the company says will reduce its debt, increase its financial flexibility, and allow it to accelerate its ongoing business transformation.
Jeffrey Stein
In connection with this process, Rite Aid said it has received a commitment for $3.45 billion in new financing from certain of its lenders, and that the money should provide sufficient liquidity to support the company through the reorganization process.
Separately, the company announced the appointment of Jeffrey Stein as chief executive officer, chief restructuring officer and a member of the company’s board of directors, effective immediately. Stein is the founder of Stein Advisors, which describes itself on its website as “a financial advisory firm that provides consulting services to public and private companies experiencing significant challenges, including financial restructuring, increased regulatory oversight and emergence from bankruptcy.” Stein succeeds Elizabeth (“Busy”) Burr, who has served as Interim CEO since January. Ms. Burr will continue in her role as a director on the company’s Board.
“Rite Aid has served customers and communities across our country for more than 60 years, and the important actions we are taking today will enable us to move ahead as a stronger company,” Stein said. “With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy. In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on – now and into the future.”
Rite Aid said it is continuing to deliver leading healthcare products and services across its retail and online platforms for the nearly one million customers it serves daily, and adds that the court-supervised reorganization process will provide an orderly and efficient forum for Rite Aid to:
- Finalize and build consensus for the agreement in principle the Company has reached with certain of its senior secured noteholders;
- Accelerate the Company’s store footprint optimization plan;
- Implement a proposed transaction under which MedImpact would acquire Elixir Solutions, subject to the outcome of a court-approved marketing process;
- Access additional liquidity; and
- Resolve litigation claims in an equitable manner.
“We remain focused on serving our customers and communities,” Stein said, “and we are grateful that they continue to choose our stores and pharmacies for their healthcare needs. We thank our associates for their ongoing hard work and dedication, and we extend our gratitude to our partners, suppliers and vendors for their continued support.”
A Wall Street Journal report that Rite Aid would close 400 to 500 stores sent the stock stumbling at the end of September.
