Current Report Filing (8-k)
22 February 2020 - 9:16AM
Edgar (US Regulatory)
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0000084129
2020-02-18
2020-02-19
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
Febuary 21, 2020 (February 19, 2020)
Rite Aid Corporation
(Exact name of registrant as specified in
its charter)
Delaware
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1-5742
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23-1614034
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(State or Other Jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification Number)
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30 Hunter Lane, Camp Hill, Pennsylvania
17011
(Address of principal executive offices,
including zip code)
(717) 761-2633
(Registrant’s telephone number, including
area code)
N/A
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which
registered
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Common Stock, $1.00 par value
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RAD
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The New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ¨
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01. Entry Into a Material Definitive Agreement.
Receivable Purchase Agreement
On February 19, 2020, Envision Insurance
Company (the “Seller”), a wholly-owned indirect subsidiary of Rite Aid Corporation (the “Company”), entered
into a receivable purchase agreement (the “Receivable Purchase Agreement”) with Part D Receivable Trust 2020-1 (Series
A) (the “Purchaser”), a Delaware statutory trust beneficially owned, directly or indirectly, by Bank of America, N.A.
Pursuant to the terms and conditions set
forth in the Receivable Purchase Agreement, Purchaser purchased from Seller all of Seller’s right, title and interest in
the 2019 Medicare Part D final reconciliation payment in the amount of $501.4 million anticipated to be paid by the Centers for
Medicare & Medicaid Services, an agency within the U.S. Department of Health and Human Services (“CMS”), to Seller
on or about October 30, 2020 (the “Receivable”). The Receivable is to be paid by CMS pursuant to a contract, last signature
dated as of September 18, 2018, by and between CMS and Seller (the “Contract”). On the closing date, the Company realized
net cash proceeds of $449.9 million, which it intends to use to repay borrowings under its revolving credit facility (without a
reduction in commitment). Under certain circumstances, as set forth in the Receivable Purchase Agreement, Seller has a right to
a purchase price adjustment of up to $34.6 million (the “Deferred Purchase Price”) payable thirty (30) days following
remittance to Purchaser of the final payment made by CMS in respect of the Receivable. The book value of the Receivable of $501.4
million less the sum of the Deferred Purchase Price of $34.6 million and the net cash proceeds of $449.9 million resulted in a
non-operating loss of $16.9 million that the Company recognized on the sale of the Receivable, which is equivalent to approximately
3.4% of the book value of the Receivable.
The
parties to the Receivable Purchase Agreement have each made customary representations and warranties. Seller agreed to various
covenants and agreements, including, among others, Seller’s agreement to perform in all material respects all terms, covenants
and other provisions required to be performed by it under the Contract and to service the Receivable. The Receivable Purchase
Agreement contains specified repurchase rights that would require Seller to repurchase the Receivable upon Purchaser’s request
if certain events occur in respect of the Receivable prior to the termination of the Receivable Purchase Agreement.
Indemnity Agreement
On
February 19, 2020, to induce Purchaser to enter the Receivable Purchase Agreement, the Company entered into an indemnity agreement
(the “Indemnity Agreement”) with Purchaser. Pursuant to the terms set forth in the Indemnity Agreement, the
Company has agreed to indemnify, reimburse and hold Purchaser harmless from certain liabilities and expenses actually suffered
or incurred by Purchaser resulting from the occurrence of certain events in respect of the Receivable, as specified therein. The
Company’s liability under the Indemnity Agreement is capped at Seller’s liability under the Receivable Purchase Agreement
plus certain costs and expenses
The foregoing description of the Receivable
Purchase Agreement, the Indemnity Agreement and the transactions contemplated thereby does not purport to be complete and is qualified
in its entirety by reference to the Receivable Purchase Agreement, a copy of which is filed as Exhibit 2.1 hereto, and the Indemnity
Agreement, a copy of which is filed as Exhibit 2.2 hereto, each of which is incorporated herein by reference. It is not intended
to provide any factual information about the Company, Seller or their respective subsidiaries and affiliates. Each of the Receivable
Purchase Agreement and the Indemnity Agreement contains representations and warranties by the contracting parties, which were made
only for purposes of those agreements and as of specified dates. The representations, warranties and covenants in each of the Receivable
Purchase Agreement and the Indemnity Agreement were made solely for the benefit of the contracting parties; are subject to limitations
agreed upon by the contracting parties; may have been made for the purposes of allocating contractual risk between the contracting
parties instead of establishing these matters as facts; and are subject to standards of materiality applicable to the contracting
parties that may differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants
or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Seller or any of their
respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and
covenants may change after the date of the Receivable Purchase Agreement and the Indemnity Agreement, which subsequent information
may or may not be fully reflected in the Company’s public disclosures.
Item 9.01. Financial Statements
and Exhibits.
(d) Exhibits.
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104
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Cover Page Interactive Data File (formatted as inline XBRL).
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* Certain information
has been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of
any of the omitted information to the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.
Date: February 21, 2020
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By:
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/s/ James J. Comitale
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Name:
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James J. Comitale
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Title:
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Executive Vice President, General Counsel
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