Daily News: February 22, 2013

Rite Aid Completes Debt Refinancing Transactions


Rite Aid said it completed its previously announced debt refinancing transactions that extend the maturity of a portion of its outstanding indebtedness and lower interest expense. Citigroup is acting as dealer manager and solicitation agent for each tender offer and consent solicitation.

The refinancing transactions included:

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;

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.

Previously on abfjournal.com:

Fitch Assigns Rating to Rite Aid’s Proposed ABL Refi, Wednesday, February 06, 2013