Rite Aid Corporation (NYSE: RAD) (“Rite Aid” or the “Company”)
today announced that it has commenced an offer to exchange (the
“Exchange Offer”) up to $600 million aggregate principal amount
(the “Maximum Amount”) of its outstanding 6.125% Senior Notes due
2023 (the “Old Notes”) for newly issued 7.500% Senior Secured Notes
due 2025 (the “New Notes”), upon the terms and subject to the
conditions set forth in the offering memorandum dated January 6,
2020 (the “Offering Memorandum”). The purpose of the Exchange Offer
is to improve the Company’s maturity profile by extending the
maturity date of a portion of the Old Notes from April 2023 to July
2025.
The table below summarizes the principal economic terms of the
Exchange Offer.
Old Notes
tobeExchanged
CUSIP Number /ISIN
AggregatePrincipalAmountOutstanding
ExchangeConsideration(1)
Early
TenderPayment(1)
Total
ExchangeConsideration(1)(2)
6.125%Senior Notesdue 2023
767754CH5 /US767754CH50 /U76659AW8
/USU76659AW82
$1,753,490,000
$950 principalamount of NewNotes
$50 principalamount ofNew Notes
$1,000 principalamount of NewNotes
____________________
(1) For each $1,000 principal amount of Old Notes. (2) Includes the
Early Tender Payment.
The New Notes will mature on July 1, 2025, will be fully and
unconditionally guaranteed on a senior secured basis by the same
subsidiary guarantors as the Company’s existing credit facilities
and the Old Notes and will be effectively senior to the Old Notes.
The New Notes and the related guarantees will be secured by
substantially all of the Company’s subsidiaries assets, including
(i) a first-priority lien on the Notes priority collateral, and
(ii) a second-priority lien on the ABL priority collateral, which,
in each case include assets of PBM entities (other than insurance
entities) and also secure the Company’s existing credit
facilities.
The ABL priority collateral generally consists of cash and cash
equivalents, accounts, receivables, payment intangibles, inventory,
prescription files (including eligible script lists) and, prior to
the repayment of the Company’s first-in, last-out senior secured
term loan facility, intellectual property. The Notes priority
collateral generally consists of equipment, fixtures, investment
property (other than equity interests in subsidiaries),
intellectual property (following the repayment of the Company’s
first-in, last-out senior secured term loan facility) and other
collateral to the extent it does not constitute ABL priority
collateral.
In order to be eligible to receive the Total Exchange
Consideration of $1,000 in principal amount of New Notes per $1,000
principal amount of Old Notes, holders are required to validly
tender their Old Notes in the Exchange Offer prior to 5:00 p.m.,
New York City time, on January 17, 2020 (such date and time, as it
may be extended by the Company, the “Early Deadline”). Holders will
be eligible to receive only the Exchange Consideration of $950 in
principal amount of New Notes per $1,000 principal amount of Old
Notes for any Old Notes tendered in the Exchange Offer after the
Early Deadline. The Exchange Offer will expire at 11:59 p.m., New
York City time, on February 3, 2020 (such date and time, as it may
be extended by the Company, the “Expiration Time”).
In addition to the Total Exchange Consideration or Exchange
Consideration, as applicable, all Old Notes accepted for exchange
will also receive payment of accrued and unpaid interest in cash
to, but not including, the settlement date for the Exchange Offer,
which will occur promptly after the Expiration Time and is expected
to be within two business days following the Expiration Time (the
“Settlement Date”).
If the Exchange Offer is oversubscribed, Old Notes will be
accepted for exchange on a pro rata basis up to the Maximum Amount,
and the balance of Old Notes not accepted for exchange will be
returned to Holders; provided that Old Notes tendered for exchange
before the Early Deadline will be accepted in priority to Old Notes
tendered for exchange after the Early Deadline.
Old Notes that are tendered may be validly withdrawn, in whole
or in part, at any time prior to 5:00 p.m., New York City time, on
January 17, 2020 (the “Withdrawal Deadline”). The Company reserves
the right to amend, extend or terminate the Exchange Offer at any
time, subject to applicable law.
The Exchange Offer is subject to certain customary conditions
described in the Offering Memorandum, including the receipt by the
Company of Old Notes that have been validly tendered and not
validly withdrawn which will result in the issuance of at least
$250 million aggregate principal amount of New Notes. The Maximum
Amount is $600 million and the Company does not intend to increase
such amount. As of November 30, 2019, $600 million is the maximum
amount of incremental secured debt that can be issued under Rite
Aid's Old Notes indenture without reducing the Company's borrowing
capacity under its revolving credit facilities (and assuming the
outstanding letters of credit).
The Exchange Offer and the issuance of the New Notes have not
been and will not be registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the
“Securities Act”), or any other applicable securities laws, and,
unless so registered, the New Notes may not be offered, sold,
pledged or otherwise transferred within the United States or to or
for the account of any U.S. person, except pursuant to an exemption
from the registration requirements thereof. Accordingly, the New
Notes are being offered and will be issued only to (i) “qualified
institutional buyers” (as defined in Rule 144A under the Securities
Act (“Rule 144A”)) and (ii) non-“U.S. persons” who are outside the
United States in compliance with Regulation S under the Securities
Act (“Regulation S”). Non U.S.-persons may also be subject to
additional eligibility criteria.
Available Documents and Other Details
Documents relating to the Exchange Offer will only be
distributed to holders of the Old Notes who complete and return an
eligibility form confirming that they are either a “qualified
institutional buyer” under Rule 144A or not a “U.S. person” under
Regulation S for purposes of applicable securities laws. Holders of
Old Notes who desire to complete an eligibility form should either
visit https://gbsc-usa.com/eligibility/riteaid or request
instructions by sending an e-mail to contact@gbsc-usa.com or by
calling Global Bondholder Services Corporation, the information and
exchange agent for the Exchange Offer, at (toll-free) (866)
470-3900 or (banks and brokers) (212) 430-3774. The eligibility
form is also available electronically at:
http://gbsc-usa.com/eligibility/riteaid.
The complete terms and conditions of the Exchange Offer are set
forth in the Offering Memorandum. This press release is for
informational purposes only and is neither an offer to purchase nor
a solicitation of an offer to sell the New Notes or any other
securities. The Exchange Offer is only being made pursuant to the
Offering Memorandum. The Exchange Offer is not being made to
holders of Old Notes in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. The New Notes have not
been approved or disapproved by any regulatory authority, nor has
any such authority passed upon the accuracy or adequacy of the
Offering Memorandum.
About Rite Aid Corporation
Rite Aid Corporation is on the front lines of delivering health
care services and retail products to over 1.6 million Americans
daily. Our pharmacists are uniquely positioned to engage with
customers and improve their health outcomes. We provide an array of
whole being health products and services for the entire family
through over 2,400 retail pharmacy locations across 18 states.
Through EnvisionRxOptions, we also deliver pharmacy benefit
management to approximately 1,900 clients and 3.4 million
members.
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.
Such statements include, but are not limited to, statements
regarding Rite Aid’s competitive position and ability to realize
its growth initiatives and operating efficiencies; and any
assumptions underlying any of the foregoing. 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 ability to complete the
transaction described herein, and any resulting charges or impact
on our financial results; 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, industry, market, competitive, regulatory and
political conditions; our ability to improve the operating
performance of our stores in accordance with our long term
strategy; the impact of private and public third-party payers
continued reduction in prescription drug reimbursements rates and
their efforts to limit access to payor networks, including through
mail order; our ability to manage expenses and our investments in
working capital; outcomes of legal and regulatory matters; changes
in legislation or regulations, including healthcare reform; our
ability to achieve the benefits of our efforts to reduce the costs
of our generic and other drugs; the inability to complete the sale
of the remaining Rite Aid distribution centers and related assets
to Walgreens Boots Alliance, Inc. due to failure to satisfy the
minimal remaining conditions applicable only to the distribution
centers being transferred at such distribution center closing; our
ability to successfully execute and achieve benefits from our
recent change in senior leadership; the potential for operational
disruptions due to, among other things, concerns of management,
employees, current and potential customers, other third parties
with whom we do business and shareholders; the success of any
changes to our business strategy that may be implemented under our
new chief executive officer and other management; our ability to
achieve cost savings through the organizational restructurings
within the anticipated timeframe, if at all; possible changes in
the size and components of the expected costs and charges
associated with the organizational restructuring plan; and the
outlook for and future growth of the Company.
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version on businesswire.com: https://www.businesswire.com/news/home/20200106006027/en/
INVESTORS:Byron Purcell(717) 975-5809
MEDIA:Christopher Savarese(717) 975-5718
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