Rite Aid Corporation (NYSE: RAD) today announced the completion of its
previously announced debt refinancing transactions that extend the
maturity of a portion of its outstanding indebtedness and lower interest
expense. The refinancing transactions included:
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the amendment and restatement of Rite Aid’s existing revolving credit
facility, including an increase in the commitments under the revolving
credit facility to $1.795 billion and an extension of the maturity to
February 2018;
-
the refinancing of Rite Aid’s $1.038 billion Tranche 2 Term Loan due
2014 and $331.7 million Tranche 5 Term Loan due 2018, each including
accrued but unpaid interest, with the proceeds from a new $1.161
billion Tranche 6 Term Loan due 2020 under Rite Aid’s first lien
credit facility, together with borrowings under the amended revolving
credit facility;
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the refinancing of, via a cash tender offer, Rite Aid’s $410.0 million
aggregate principal amount of 9.750% Senior Secured Notes due 2016
with proceeds from the Tranche 6 Term Loan, together with borrowings
under the amended revolving credit facility;
-
the refinancing of, via a cash tender offer, Rite Aid’s $470.0 million
aggregate principal amount of 10.375% Senior Secured Notes due 2016
with the proceeds from a new $470 million Tranche 1 Term Loan due 2020
under Rite Aid’s new second lien credit facility, together with
borrowings under the amended revolving credit facility; and
-
a cash tender offer for Rite Aid’s $180.3 million aggregate principal
amount of 6.875% Senior Debentures due 2013 with available cash.
Rite Aid expects to record a loss on debt modifications of $117.0
million related to the transactions and expects to have annual cash
interest savings of approximately $45.0 million.
As part of the tender offers, Rite Aid solicited consents for amendments
that would eliminate or modify certain covenants, events of default and
other provisions contained in the indentures governing each series of
notes. Rite Aid announced today that it has received the requisite
consents in each consent solicitation to execute a supplemental
indenture to effect the proposed amendments.
As of the consent payment deadline at midnight, Eastern Time, on Feb.
13, 2013, approximately (i) $257.1 million aggregate principal amount of
the 9.750% Notes were tendered (representing approximately 62.7% of the
outstanding 9.750% Notes), (ii) $402.0 million aggregate principal
amount of the 10.375% Notes were tendered (representing approximately
85.5% of the outstanding 10.375% Notes) and (iii) $119.0 million
aggregate principal amount of the 6.875% Debentures were tendered
(representing approximately 66.0% of the outstanding 6.875% Debentures).
Rite Aid has exercised its option to accept for payment and settle the
tender offers with respect to all of the notes that were validly
tendered at or prior to the consent payment deadline. Such early
settlement occurred today concurrently with the closing of the other
refinancing transactions. The supplemental indentures implementing the
proposed amendments became effective upon closing of the refinancing
transactions.
The tender offers will expire at midnight, Eastern Time, on Feb. 28,
2013, unless extended or earlier terminated. Although Rite Aid has
called the 9.750% Notes and 10.375% Notes that remain outstanding
following the tender offers for redemption (as discussed below), holders
of such notes may still validly tender their notes prior to the
expiration date. For more information regarding the tender offers and
related consent solicitations, see the applicable offer to purchase.
Rite Aid today also delivered notice that it had called for redemption
all of the 9.750% Notes and 10.375% Notes that remain outstanding
following consummation of the tender offers. The 9.750% Notes that
remain outstanding will be redeemed at a price equal to 100.000% of
their face amount, plus a make-whole premium and accrued and unpaid
interest to, but not including, the date of redemption. The 10.375%
Notes that remain outstanding will be redeemed at a price equal to
105.188% of their face amount, plus accrued and unpaid interest to, but
not including, the date of redemption. Redemption of the remaining
9.750% Notes and 10.375% Notes, respectively, will occur on March 25,
2013. Rite Aid has prefunded all remaining payments on each of the
remaining 9.750% Notes, 10.375% Notes and 6.875% Debentures and as a
result, all such notes will be satisfied and discharged as of Rite Aid’s
fiscal year end.
This press release does not constitute a notice of redemption under the
optional redemption provisions of the indenture governing any series of
the notes, nor does it constitute an offer to sell, or a solicitation of
an offer to buy, any security. No offer, solicitation, or sale will be
made in any jurisdiction in which such an offer, solicitation, or sale
would be unlawful.
Requests for documents relating to each tender offer and consent
solicitation may be directed to Global Bondholder Services Corp., the
Information Agent, at (866) 804-2200 or (212) 430-3774 (banks and
brokers). Citigroup is acting as Dealer Manager and Solicitation Agent
for each tender offer and consent solicitation. Questions regarding each
tender offer and consent solicitation may be directed to Citigroup at
(800) 558-3745 (toll free) or (212) 723-6106 (collect).
Rite Aid is one of the nation’s leading drugstore chains with 4,626
stores in 31 states and the District of Columbia and fiscal 2012 annual
revenues of $26.1 billion.
Statements in this release that are not historical are
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Words such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and
variations of such words and similar expressions are intended to
identify such forward-looking statements. These forward-looking
statements are not guarantees of future performance and involve risks,
assumptions and uncertainties, including, but not limited to, our high
level of indebtedness and our ability to make interest and principal
payments on our debt and satisfy the other covenants contained in our
debt agreements, general economic, market and competitive conditions,
our ability to improve the operating performance of our stores in
accordance with our long term strategy, the continued efforts of private
and public third-party payers to reduce prescription drug reimbursements
and encourage mail order and limit access to payor networks, the ability
to realize anticipated results from capital expenditures and cost
reduction initiatives, outcomes of legal and regulatory matters and
changes in legislation or regulations, including healthcare reform.
These and other risks, assumptions and uncertainties are described in
Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and
in other documents that we file or furnish with the Securities and
Exchange Commission, which you are encouraged to read. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from
those indicated or anticipated by such forward-looking statements.
Accordingly, you are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date they are
made. Rite Aid expressly disclaims any current intention to update
publicly any forward-looking statement after the distribution of this
release, whether as a result of new information, future events, changes
in assumptions or otherwise.