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PHILADELPHIA — Rite Aid Corp. is nearing a deal with key bondholders and other creditor groups that will allow the pharmacy chain to avoid a liquidation, according to published reports.
The deal calls for junior bondholders to take over the struggling pharmacy chain and exit Chapter 11 protection as a going concern, according to the people, who asked not to be identified discussing the private accord. The so-called global settlement would incorporate deals with a committee of tort claimants and its asset-based lenders, the people said.
Rite Aid lawyer Aparna Yenamandra said during a Tuesday court hearing that the company has reached agreement “on all key economic points” with its primary financial stakeholders, including its banks, junior bondholders, the US Justice Department, McKesson Corp. and committees representing unsecured creditors, opioid victims and others with tort claims.
Details about the deal weren’t disclosed in court. Rite Aid and various stakeholders have been negotiating in a confidential mediation overseen by a former bankruptcy judge. Still, Rite Aid lawyers said an open issue must be resolved between the company, banks and bondholders but that the retailer is confident the undisclosed issue can be resolved in the coming days as parties document the proposed agreement.
Rite Aid, which has denied wrongdoing, is still finalizing some of the settlements that are critical to the restructuring, including an agreement that would resolve a U.S. Department of Justice investigation into Rite Aid’s opioid sales.But lawyers for the company said it is ready to solicit votes from bondholders, who are the critical voting class in its bankruptcy.No other group will be entitled to vote in Rite Aid’s bankruptcy, and the bondholders’ votes are due on April 15.
