Rite Aid Releases Terms of Its Senior Secured Notes Offering

Rite Aid Corp. announced the terms of an offering of $410 million aggregate principal amount ($10.0 million more than previously announced) of its 9.750 percent senior secured notes due 2016 (representing a yield to maturity of 10.125 percent, based on an offering price of 98.196 percent per Note).

In a release, the company noted that the Notes will be unsecured, unsubordinated obligations of Rite Aid Corp. and will be guaranteed by substantially all of Rite Aid's subsidiaries. The guarantees will be secured on a senior lien basis.

The transaction is expected to close on June 12, subject to customary closing conditions. The offering is part of the previously announced plan to refinance Rite Aid's September 2010 debt maturities.

Also included in the refinancing is a new $525 million term loan due June 2015 under Rite Aid's Senior Secured Credit Facility. Proceeds from the new term loan, which is scheduled to close on June 10, will be used to refinance the $145 million Tranche 1 Term Loan due September 2010 under Rite Aid's Senior Secured Credit Facility, repay and cancel a portion of the commitments outstanding under Rite Aid's existing $1.75 billion senior secured revolving credit facility also due September 2010, and for fees and other expenses.

The company said that as part of the refinancing, it is also seeking to enter a new $1.0 billion senior secured revolving credit facility due September 2012 (the "New Revolver"), for which it has obtained $900 million in commitments. Rite Aid intends to use the net proceeds from the offering of the Notes, together with borrowings under the New Revolver, to repay the remaining amounts outstanding and replace Rite Aid's existing revolving credit facility, and to fund related fees and expenses.

The Notes offering is not contingent upon the entry into the New Revolver, which is subject to successful syndication and satisfaction of customary closing conditions. In the event that the New Revolver is in an amount less than $1.0 billion, Rite Aid may seek to offer additional Notes or other indebtedness, which may be secured.

The Notes and the related subsidiary guarantees have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements.

Rite Aid is a drugstore chain with more than 4,800 stores in 31 states and the District of Columbia and fiscal 2009 annual sales of more than $26.3 billion.

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