Rite Aid settles tenders for $180,000 9¾% notes, $163,000 6 7/8% notes

By Susanna Moon

Chicago, March 1 - Rite Aid Corp. said investors tendered $257.3 million, or 62.8%, of its 9¾% senior secured notes due 2016, $402 million, or 85.5%, of its 10 3/8% senior secured notes due 2016 and $119.1 million, or 66.1%, of its 6 7/8% senior debentures due 2013 by the end of its offers at midnight ET on Feb. 28.

The company purchased all of the notes tendered by the consent deadline on Feb. 21 and the $180,000 of 9¾% notes and $163,000 of 6 7/8% notes tendered since the consent date on March 1, according to a press release.

The tender offers began on Jan. 31 for the company's $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, as noted before.

The consents received were enough to amend the three series of notes.

Rite Aid called the remaining 9¾% notes and 10 3/8% notes for redemption on March 25. The redemption price is par plus a make-whole premium for the 9¾% notes and 105.188 for the 10 3/8% notes.

On Feb. 21, Rite Aid said it had 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.

Payment, offer terms

For each $1,000 principal amount, the company paid $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 also received accrued interest up to but excluding the settlement date.

The total payment included a $30.00 consent payment for each $1,000 of notes tendered by the consent payment date.

Holders of 6 7/8% debentures whose tenders were settled by Feb. 15 were 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 received only the accrued interest described above.

More offer details

The tender offers were subject to certain conditions. For the 9¾% notes and the 10 3/8% notes, these included the completion of one or more financing transactions resulting in enough proceeds to fund the offers.

The company previously said the tender offers were 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 Feb. 21.

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

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

Citigroup (800 558-3745 or 212 723-6106) was the dealer manager and solicitation agent for the tender offers. The information agent was 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.

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