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CAMP HILL, Pa. — Rite Aid Corp. plans to refinance $500 million in debt and, in tandem with the transaction, is projecting net earnings for its fiscal 2014 first quarter, which would mark the drug chain’s third consecutive profitable quarter.
Rite Aid has commenced a cash tender offer for its $500 million of 7.5% senior secured notes due in 2017, which will be funded with the proceeds from a new $500 million second-lien term loan and cash and/or borrowings under its credit revolver.
According to Rite Aid, the transaction would extend the maturity of some of its outstanding debt and lower interest costs.
In connection with the debt refinancing, Rite Aid reported preliminary results for the fiscal 2014 first quarter, with net income estimated at $75 million to $90 million, or 8 cents to 9 cents per diluted share, compared with a net loss of $28.1 million, or a loss of 3 cents per share, for the fiscal 2013 quarter. The company noted that actual first quarter results haven’t been finalized by management.
If the projection bears out, it would be another sign of improved profitability for the company.
Rite Aid posted earnings for fiscal 2013 ended March 2, its first full-year profit in six years, and finished the year with profits in the third and fourth quarters. The net income for the third quarter ended December 1 was Rite Aid’s first quarterly profit in over five years.
