Rite Aid settles early tenders, calls remaining 9¾%, 10 3/8% notes

By Marisa Wong

Madison, Wis., Feb. 21 - Rite Aid Corp. said it has received the necessary consents to amend its 9¾% senior secured notes due 2016, 10 3/8% senior secured notes due 2016 and 6 7/8% senior debentures due 2013.

Rite Aid began tender offers on Jan. 31 for its $410 million of 9¾% notes, $470 million of 10 3/8% notes and $180,277,000 of 6 7/8% debentures, as previously announced.

The company also solicited consents to eliminate or modify some covenants, events of default and other provisions in the indentures governing the notes.

As of midnight ET on Feb. 13, the consent payment deadline, holders had tendered and delivered consents for $257.1 million, or 62.7%, of the 9¾% notes, $402 million, or 85.5%, of the 10 3/8% notes and $119 million, or 66%, of the 6 7/8% debentures, according to a press release.

Rite Aid said it decided to accept for payment all of the notes tendered by the consent payment deadline. Those notes settled on Feb. 21.

On Thursday Rite Aid also called for redemption all of the 9¾% notes and 10 3/8% notes that remain outstanding following completion of the tender offers.

Any remaining 9¾% notes will be redeemed at par plus a make-whole premium, and remaining 10 3/8% notes will be redeemed at 105.188. The redemption prices will also include accrued interest up to but excluding the redemption date, March 25.

Rite Aid said it has prefunded all remaining payments on each of the remaining 9¾% notes, 10 3/8% notes and 6 7/8% debentures, so these notes will be satisfied and discharged as of fiscal year-end.

Although Rite Aid has called the 9¾% notes and 10 3/8% notes that remain outstanding after the tender offers, holders may still tender prior to the expiration of the offers, which is midnight ET on Feb. 28.

Offer terms

As previously reported, for each $1,000 principal amount, the company is offering $1,075.00 for the 9¾% notes, $1,058.50 for the 10 3/8% notes and $1,028.75 for the 6 7/8% debentures. Holders will also receive accrued interest up to but excluding the applicable settlement date.

Each of the payments noted includes a $30.00 consent payment for each note tendered by the consent payment date.

Holders of 6 7/8% debentures whose tenders are settled prior to Feb. 15 will be deemed to have consented to giving up any claim to the interest payment due Feb. 15 that they might otherwise have as a result of the record date of Feb. 1 and will receive only the accrued interest described above.

Holders of 6 7/8% debentures that are satisfied and discharged will continue to receive regular interest payments, and the repayment of their 6 7/8% debentures will be made at maturity on Aug. 15, 2013.

In addition, Rite Aid will redeem on Feb. 25 all of its $6 million principal amount of outstanding 9¼% senior notes due 2013.

The tender offers and consent solicitations are subject to certain conditions. For the 9¾% notes and the 10 3/8% notes, these include the completion of one or more financing transactions resulting in net proceeds to Rite Aid that are enough to pay the total consideration plus accrued interest.

The tender offers are part of a series of debt refinancing transactions that include the amendment and restatement of Rite Aid's existing revolving credit facility and the refinancing of its $1.04 billion tranche 2 term loan due 2014 with the proceeds of a new term loan, together with borrowings under the amended revolver. Those related refinancing transactions were completed on Thursday.

The tender offers will be funded with the proceeds from new first- and/or second-lien term loans, together with borrowings under the amended revolver and available cash.

Citigroup (800 558-3745 or 212 723-6106) is the dealer manager and solicitation agent for the tender offers. The information agent is Global Bondholder Services Corp. (866 804-2200 or 212 430-3774 for banks and brokers).

Rite Aid is a drugstore chain based in Camp Hill, Pa.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.