Transaction Will Refinance and Extend the
Maturity of $1,062,682,000 of Its Senior Notes Due 2023
Rite Aid Corporation (NYSE: RAD) (“Rite Aid” or the “Company”)
today announced the final tender results of its previously
announced offer to exchange (the “Exchange Offer”) up to $1.125
billion aggregate principal amount (the “Maximum Amount”) of its
outstanding 6.125% Senior Notes due 2023 (the “Old Notes”) for
newly issued 8.000% Senior Secured Notes due 2026 (the “New Notes”)
and cash. The purpose of the Exchange Offer was to improve the
Company’s maturity profile by extending the maturity date of a
portion of the Old Notes from April 2023 to November 2026.
The table below sets forth the aggregate principal amount of Old
Notes that were validly tendered as of 11:59 p.m., New York City
time, on July 23, 2020 (the “Expiration Time”) and the “Total
Consideration” and “Exchange Consideration” that holders of such
tendered Old Notes will receive. The Company will issue
$849,918,000 aggregate principal amount of New Notes and, following
the settlement date, $90,808,000 aggregate principal amount of Old
Notes will remain outstanding.
Old Notes to be
Exchanged
CUSIP Number / ISIN
Aggregate Principal Amount
Outstanding
Maximum Amount
Aggregate Principal Amount
Tendered at or prior to the Early Deadline(1)
Aggregate Principal
Amount Tendered after the
Early Deadline and prior to the Expiration Time
Percent of Principal Amount
Outstanding Tendered
Exchange
Consideration(2)
Total Exchange Consideration
(if tendered prior to the Early Deadline)(2)(3)
6.125% Senior Notes due 2023
767754CH5 / US767754CH50 /
U76659AW8 /
USU76659AW82
$1,153,490,000
$1,125,000,000
$1,053,255,000
$9,427,000
92.13%
$800 principal amount of New Notes and
$191.50 in cash
$800 principal amount of New Notes and
$194 in cash
(1)
Based on the aggregate principal
amount tendered at 5:00 p.m., New York City time, on July 9, 2020
(the “Early Deadline” or the “Consent Deadline”, as
applicable).
(2)
For each $1,000 principal amount
of Old Notes.
(3)
Includes the “Early Tender
Payment” of $40 principal amount of New Notes and $7.50 in cash and
the Consent Payment of $2.50 in cash per $1,000 principal amount of
Old Notes. The Consent Payment was payable in respect of Consents
received prior to the Consent Deadline.
Eligible Holders (as defined below) who tendered (and did not
validly withdraw) prior to the Expiration Time and whose Old Notes
are accepted for exchange will also receive payment of accrued and
unpaid interest in cash from the last interest payment date for the
Old Notes (January 31, 2020), to, but not including, the settlement
date for the Exchange Offer, which is expected to be July 27, 2020.
Eligible Holders who either did not tender, or tendered and validly
withdrew, will receive the interest payable on the Old Notes on
August 1, 2020, if they were a Holder at the close of business on
July 15, 2020. Eligible Holders who tendered prior to the Early
Deadline (and did not validly withdraw) and whose Old Notes are not
accepted for exchange will receive the interest payable on the Old
Notes on August 1, 2020. Holders who delivered their Consents
without tendering Old Notes will receive the Consent Payment only.
Rite Aid will accept for purchase all Old Notes validly tendered
(and not validly withdrawn) prior to the Expiration Time.
In conjunction with the Exchange Offer the Company also
solicited consents (the “Consent Solicitation”) to proposed
amendments (the “Proposed Amendments”) from all holders of the Old
Notes (each, a “Holder”) to the indenture governing the Old Notes,
which modify the debt and lien covenants to provide additional
secured debt capacity by creating exemptions for (i) the $600
million of outstanding 7.500% Senior Secured Notes due 2025 and
(ii) the New Notes. The adoption of the Proposed Amendments
required the consents (the “Consents”) of the Holders of at least a
majority of the outstanding principal amount of the Old Notes (the
“Requisite Consents”). As of the Consent Deadline, the Company had
received the Requisite Consents and the Company executed a
supplemental indenture (a “Supplemental Indenture”) on the Consent
Deadline. The Supplemental Indenture became effective upon
execution thereof by the Company, the guarantors thereto and The
Bank of New York Mellon Trust Company, N.A., the trustee of the Old
Notes (the “Old Notes Trustee”) and will become operative on the
settlement date of the Exchange Offer and the Consent
Solicitation.
The Exchange Offer and the issuance of the New Notes were not
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 will be offered and issued only to Holders that are (i)
“qualified institutional buyers” as defined in Rule 144A under the
Securities Act (“Rule 144A”) and (ii) persons outside the United
States that are not “U.S. persons” in compliance with Regulation S
under the Securities Act (“Regulation S”) and that are not
acquiring the New Notes for the account or benefit of a U.S.
person. Non U.S.-persons may also have been subject to additional
eligibility criteria. We refer to the Holders who have certified to
us that they are eligible to participate in the Exchange Offer
pursuant to at least one of the foregoing conditions as “Eligible
Holders.”
The complete terms and conditions of the Exchange Offer and
Consent Solicitation were set forth in the offering memorandum and
consent solicitation statement dated June 25, 2020, as amended and
supplemented on July 10, 2020 (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 or of Consents. The Exchange Offer
and Consent Solicitation were only made pursuant to the Offering
Memorandum. The Exchange Offer was not made to Holders 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 will not be approved or disapproved by
any regulatory authority, nor will any such authority pass 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. Rite Aid’s pharmacists are uniquely positioned to engage
with customers and improve their health outcomes. Rite Aid provides
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, Rite Aid provides pharmacy
benefits services to approximately 4 million members
nationwide.
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.
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 exchange
offer and consent solicitation and any resulting charges or impact
on our financial results; the impact of widespread health
developments, including the continued impact of the global
coronavirus (“COVID-19”) pandemic, and the responses thereto (such
as voluntary and in some cases, mandatory quarantines as well as
shut downs and other restrictions on travel and commercial, social
and other activities) which could materially and adversely affect,
among other things, the economic and financial markets and labor
resources of the locations in which we operate, access to credit,
our front-end and pharmaceutical operations, supply chain,
associates and executive and administrative personnel. These
widespread health developments could also materially and adversely
affect our third-party service providers, including suppliers,
vendors and business partners, and customers and the demand for our
products. These developments could result in recessionary economic
conditions which could negatively impact our front-end sales and
e-commerce business. Any of these developments could result in a
material adverse effect on our business, financial conditions and
results of operations; our ability to successfully implement our
new business strategy (including any delays or adjustments as a
result of COVID-19) and improve the operating performance of our
stores; our high level of indebtedness and our ability to satisfy
our obligations and the other covenants contained in our debt
agreements; general competitive, economic, industry, market,
political (including healthcare reform), and regulatory conditions,
as well as factors specific to the markets in which we operate; the
impact of private and public third party payors’ continued
reduction in prescription drug reimbursement rates and efforts to
encourage mail order; our ability to achieve the benefits of our
efforts to reduce the costs of our generic and other drugs; the
risk that we may experience shortages in our generic drug supply
due to replenishment delays resulting from COVID-19, which could
result in the substitution of generic drugs with brand drugs, which
generally have a lower profit margin; the risk that changes in
federal or state laws or regulations, including the Health Care
Education Affordability Reconciliation Act, the repeal of all or
part of the Patient Protection and the Affordable Care Act and any
regulations enacted thereunder may occur; the impact of the loss of
one or more major third party payor contracts and the risk that
providers and state contract changes may occur; the risk that we
may need to take further impairment charges if our future results
do not meet our expectations; our ability to refinance our
indebtedness on terms favorable to us; our ability to sell our
calendar 2020 Centers of Medicare and Medicaid Services (“CMS”)
receivable, which could negatively impact our leverage ratio if we
do not consummate a sale; our ability to grow prescription count
and realize front-end sales growth; the continued integration of
our new senior management team and our ability to realize the
benefits from our organizational restructuring; our ability to
achieve cost savings through the organizational restructurings
within our anticipated timeframe, if at all; decisions to close
additional stores and distribution centers or undertake additional
refinancing activities, which could result in further charges; our
ability to manage expenses and our investments in working capital;
the continued impact of gross margin pressure in the pharmacy
benefit management (“PBM”) industries due to continued
consolidation and client demand for lower prices while providing
enhanced service offerings; risks related to compromises of our
information or payment systems or unauthorized access to
confidential or personal information of our associates or
customers; our ability to maintain our current pharmacy services
business and obtain new pharmacy services business, including
maintaining renewals of expiring contracts, avoiding contract
termination rights that may permit certain of our clients to
terminate their contracts prior to their expiration, early price
renegotiations prior to contract expirations and the risk that we
cannot meet client guarantees; our ability to maintain our current
Medicare Part D business and obtain new Medicare Part D business,
as a result of the annual Medicare Part D competitive bidding
process and meet the financial obligations of our bid; the
expiration or termination of our Medicare or Medicaid managed care
contracts by federal or state governments; changes in future
exchange or interest rates or credit ratings, changes in tax laws,
regulations, rates and policies; the risk that we could experience
deterioration in our current Star rating with the CMS or incur CMS
penalties and/or sanctions; the nature, cost and outcome of pending
and future litigation and other legal or regulatory proceedings,
and governmental investigations; and other risks and uncertainties
described from time to time in our filings with the SEC.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200724005455/en/
INVESTORS: Byron Purcell (717) 975-5809 investor@riteaid.com
MEDIA: Christopher Savarese (717) 975-5718
Christopher.Savarese@riteaid.com
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