Tender offer part of refinancing that is
expected to include an increased revolving credit facility.
Refinancing will improve debt maturity profile and result in
decreased interest expense.
Rite Aid Corporation (NYSE: RAD) (“we,” “us,” “our” or the
“Company”) today announced the results, as of 5:00 p.m., New York
City time, on November 17, 2022 (the “Original Early Tender
Deadline”) of its previously announced tender offer (the “Tender
Offer”) to purchase for cash up to $200 million aggregate purchase
price (not including any accrued and unpaid interest, the
“Aggregate Maximum Purchase Price”) of the Company’s outstanding
7.500% Senior Secured Notes due 2025 (the “Notes”). The Company
also announced that it is (i) extending the Original Early Tender
Deadline and withdrawal deadline to 5:00 p.m., New York City time,
on November 22, 2022, unless further amended in the Company’s sole
discretion (as extended hereby, the “Early Tender Deadline” and
“Withdrawal Deadline,” respectively), (ii) waiving the Financing
Condition (as defined below) and (iii) terminating the Consent
Solicitation (as defined below). The final expiration time of the
Tender Offer will also be extended and the Tender Offer will expire
immediately after 11:59 p.m., New York City time, on December 7,
2022, unless further extended or earlier terminated by the Company
(the “Expiration Time”). The Company does not intend to make any
further amendments or changes to the Tender Offer.
The terms and conditions of the Tender Offer are described in an
Offer to Purchase and Consent Solicitation Statement, dated
November 3, 2022, as amended by this press release (as amended and
supplemented, the “Offer to Purchase and Consent Solicitation
Statement”). The following table summarizes the material terms of
the Tender Offer and the aggregate principal amount of Notes
validly tendered and not validly withdrawn at or prior to the
Original Early Tender Deadline.
Title of Notes
CUSIP Number
Aggregate Principal Amount
Outstanding
Aggregate Principal Amount
Tendered at the Original Early Tender Deadline
Aggregate Maximum Purchase
Price
Early Tender Premium
(1)(2)
Tender Offer Consideration
(1)(3)
Total Consideration
(1)(3)
7.500% Senior Secured Notes due 2025
U76659AX6
767754CK8
$
485,058,000
$
177,856,000
$
200,000,000
$
50.00
$
700.00
$
750.00
(1)
Per $1,000 principal amount of Notes
tendered and accepted for purchase.
(2)
Included in the Total Consideration for
Notes tendered and accepted for purchase on or prior to the Early
Tender Deadline.
(3)
Does not include accrued and unpaid
interest from the last date on which interest has been paid to, but
excluding, the Early Settlement Date (as defined below) or the
Final Settlement Date (as defined below), as applicable, that will
be paid on the Notes accepted for purchase.
The consummation of the Tender Offer is subject to, and
conditioned upon, the satisfaction or waiver of certain conditions
described in the Offer to Purchase and Consent Solicitation
Statement, including the Company entering into certain amendments
to the Company’s existing credit agreement providing for, among
other things, an increase in the available borrowing commitments
thereunder, the net proceeds of which, together with cash on hand
and/or other sources of liquidity, are sufficient to fund the
purchase of the Notes validly tendered on or prior to the Early
Tender Deadline and accepted for purchase (such condition, the
“Financing Condition” and all such conditions, the “Tender Offer
Conditions”). The Company continues to pursue such amendments but
has sufficient liquidity to fund the Tender Offer so it has elected
to waive the Financing Condition. The consummation of the Tender
Offer will continue to be subject to, and conditioned upon, the
satisfaction or waiver of the other Tender Offer Conditions
described in the Offer to Purchase and Consent Solicitation
Statement. The Tender Offer is not conditioned on any minimum
amount of Notes being tendered. We reserve the right, but are
under no obligation, to waive any and all of the remaining
conditions of the Tender Offer at any time, in each case without
extending the Early Tender Deadline, the Withdrawal Deadline or the
Expiration Time or otherwise reinstating withdrawal rights of
holders, subject to applicable law. The Tender Offer could
adversely impact the Company’s credit ratings but is expected to
result in improved leverage and reduced interest expense while
maintaining strong liquidity and improving our debt maturity
profile.
Additionally, the Company announced today that it has terminated
its previously announced solicitation of consents (the “Consents”)
from holders of the Notes (the “Consent Solicitation”) to certain
proposed amendments (and the release of collateral) to the
indenture governing the Notes (the “Indenture”) originally
described in the Offer to Purchase and Consent Solicitation
Statement. All Consents are heretofore deemed null and void and the
proposed amendments shall not be effected. However, all Notes that
were previously validly tendered and not validly withdrawn will
remain tendered unless such holder withdraws its Notes on or prior
to the Withdrawal Deadline pursuant to the procedures set forth in
the Offer to Purchase and Consent Solicitation Statement.
Additionally, holders that tendered their Notes on or prior to the
date hereof (including Notes that were withdrawn and re-tendered)
will not be deemed to deliver any Consent therewith.
Any Notes validly tendered may be withdrawn from the Tender
Offer on or prior to the Withdrawal Deadline. Any Notes validly
tendered on or prior to the Withdrawal Deadline that are not
validly withdrawn on or prior to the Withdrawal Deadline may not be
withdrawn thereafter, except as required by law. In addition, any
Notes validly tendered after the Withdrawal Deadline may not be
withdrawn, except as required by law.
Subject to the terms and conditions of the Tender Offer,
including the Aggregate Maximum Purchase Price and proration,
holders of Notes that are validly tendered on or prior to Early
Tender Deadline and not validly withdrawn at any time on or prior
to the Withdrawal Deadline will be eligible to receive the Total
Consideration set forth in the table above, which includes the
Early Tender Premium set forth in the table above. Holders of Notes
tendering their Notes after the Early Tender Deadline, but on or
prior to the Expiration Time, will only be eligible to receive the
Tender Offer Consideration set forth in the table above, which is
the Total Consideration less the Early Tender Premium. No tenders
will be valid if submitted after the Expiration Time. The Early
Settlement Date (as defined below) may occur, at our option, no
earlier than the Early Tender Deadline. We reserve the right, in
our sole discretion, to extend or forgo the Early Settlement Date,
if any. In the event that we forgo the Early Settlement Date, all
holders whose Notes are accepted for payment by the Company will
receive payment on the Final Settlement Date.
In addition, holders of all Notes validly tendered and accepted
for purchase pursuant to the Tender Offer will receive accrued and
unpaid interest on such Notes from the last date on which interest
has been paid to, but excluding, the Early Settlement Date or the
Final Settlement Date, as applicable. The Early Settlement Date, if
we choose to have one, is currently expected to be on or about
November 28, 2022, unless extended or earlier terminated by us with
respect to the Tender Offer in our sole discretion (the “Early
Settlement Date”). The Final Settlement Date is expected to be on
December 9, 2022, unless extended or earlier terminated by us with
respect to the Tender Offer in our sole discretion (the “Final
Settlement Date”). The change in structure will result in certain
changes to the tax disclosure in the Offer to Purchase and Consent
Solicitation Statement, which disclosure will be updated in a
separate supplement to the Offer to Purchase and Consent
Solicitation Statement.
The aggregate purchase price of the Notes that may be purchased
pursuant to the Tender Offer will not exceed the Aggregate Maximum
Purchase Price. The Company reserves the right, but is under no
obligation, to increase or decrease the Aggregate Maximum Purchase
Price at any time, in each case without extending the Early Tender
Deadline, the Withdrawal Deadline or the Expiration Date or
otherwise reinstating withdrawal or revocation rights of holders,
subject to applicable law, which could result in the Company
purchasing a greater or lesser amount of the Notes in the Tender
Offer. Acceptance of tenders of the Notes may be subject to
proration if the aggregate purchase price of the Notes validly
tendered and not validly withdrawn would exceed the Aggregate
Maximum Purchase Price.
Subject to the satisfaction or waiver of the conditions to the
Tender Offer, if the Company accepts for purchase any Notes validly
tendered on or prior to the Early Tender Deadline and not validly
withdrawn on or prior to the Withdrawal Deadline, such Notes will
be accepted for purchase in priority to other Notes validly
tendered or delivered pursuant to the Tender Offer after the Early
Tender Deadline. Accordingly, if the Aggregate Maximum Purchase
Price is reached in respect of tenders made on or prior to the
Early Tender Deadline, no Notes that are validly tendered after the
Early Tender Deadline will be accepted for purchase and any Notes
accepted for purchase on the Early Settlement Date, if any, or the
Final Settlement Date will be accepted on a prorated basis up to
the amount of the Aggregate Maximum Purchase Price unless the
Aggregate Maximum Purchase Price is increased up to an amount that
would allow us to purchase all such Notes.
This press release does not constitute an offer to sell, or a
solicitation of an offer to buy, any security. No offer,
solicitation, or sale will be made in any jurisdiction in which
such an offer, solicitation, or sale would be unlawful.
BofA Securities is the dealer manager (the “Dealer Manager”) in
the Tender Offer. Global Bondholder Services Corporation has been
retained to serve as the tender and information agent (the “Tender
and Information Agent”) for the Tender Offer. Questions regarding
the Tender Offer should be directed to BofA Securities by telephone
at (980) 388-3646 (call collect) or (888) 292-0070 (toll-free) or
by email at debt_advisory@bofa.com. Requests for copies of the
Offer to Purchase and Consent Solicitation Statement and other
related materials should be directed to Global Bondholder Services
Corporation by telephone at (855) 654-2014 (toll-free) or (212)
430-3774 (collect); by email at contact@gbsc-usa.com; or by
internet at the following web address:
https://www.gbsc-usa.com/riteaid/.
None of the Company, its board of directors, the Dealer Manager,
the Tender and Information Agent, the Trustee and the Notes
Collateral Agent under the Indenture, the Depository Trust Company
nor any of their respective affiliates, makes any recommendation as
to whether any holder should tender or deliver, or refrain from
tendering or delivering, any or all of such holder’s Notes, and
none of the Company nor any of its affiliates has authorized any
person to make any such recommendation. The Tender Offer are made
only by the Offer to Purchase and Consent Solicitation Statement.
The Tender Offer are not being made to holders of Notes 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. In any jurisdiction where the securities, blue sky or
other laws require the Tender Offer to be made by a licensed broker
or dealer, the Tender Offer will be deemed to be made on behalf of
the Company by the Dealer Manager or one or more registered brokers
or dealers that are licensed under the laws of such
jurisdiction.
About Rite Aid
Rite Aid Corporation is on the front lines of delivering
healthcare services and retail products to Americans 365 days a
year. Our pharmacists are uniquely positioned to engage with
customers and improve their health outcomes. We provide an array of
whole being health products and services for the entire family
through over 2,300 retail pharmacy locations across 17 states.
Through Elixir, we provide pharmacy benefits and services to
millions of members nationwide.
Forward-Looking Statements
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.
Such statements include, but are not limited to, the expected
timing and terms of the proposed Tender Offer. 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: risks related to the prolonged
impact of the COVID-19 global pandemic and the emerging new
variants, including the government responses thereto; the impact of
COVID-19 on our workforce, operations, stores, expenses, and supply
chain, and the operations or behaviors of our customers, suppliers
and business partners; our ability to successfully implement our
store closure program and other strategies; the impact of our high
level of indebtedness, the ability to refinance such indebtedness
on acceptable terms (including the impact of rising interest rates,
market volatility, and continuing actions by the United States
Federal Reserve) and our ability to satisfy our obligations and the
other covenants contained in our debt agreements; outcome of
pending or new litigation, including related to opioids, “usual and
customary” pricing or other matters; our ability to monetize (and
on reasonably available terms) the Centers of Medicare and Medicaid
Services receivable created in our Part D business; general
competitive, economic, industry, market, political (including
healthcare reform) and regulatory conditions (including changes to
laws or regulations relating to labor or wages), and regulatory
conditions, including continued impacts of inflation or other
pricing environment factors on our costs, liquidity and our ability
to pass on price increases to our customers, including as a result
of inflationary and deflationary pressures, a decline in consumer
financial position, whether due to inflation or other factors, as
well as other factors specific to the markets in which we operate;
the impact of private and public third-party payers continued
reduction in prescription drug reimbursements and efforts to
encourage mail order; our ability to manage expenses and our
investments in working capital; our ability to achieve the benefits
of our efforts to reduce the costs of our generic and other drugs;
our ability to achieve cost savings and other benefits of our
restructuring efforts within our anticipated timeframe, if at all;
the outcome of our continuing efforts to monitor and comply with
applicable laws, regulations, policies and procedures; and our
ability to partner and have relationships with health plans and
health systems.
These and other risks, assumptions and uncertainties are more
fully described in Item 1A (Risk Factors) of our most recent Annual
Report on Form 10-K and in other documents that we file or furnish
with the SEC, which you are encouraged to read. To the extent that
COVID-19 adversely affects our business and financial results, it
may also have the effect of heightening many of such risk
factors.
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary materially from those indicated or anticipated by such
forward-looking statements. Accordingly, you are cautioned not to
rely on these forward-looking statements, which speak only as of
the date they are made.
The degree to which COVID-19 may adversely affect Rite Aid’s
results and operations, including its ability to achieve its
outlook for fiscal 2023 guidance, will depend on numerous evolving
factors and future developments, which are highly uncertain,
including, but not limited to, federal, state and local
governmental policies and initiatives designed to reduce the
transmission of COVID-19 and emerging new variants and how quickly
and to what extent normal economic and operating conditions can
resume. As a result, the impact on Rite Aid’s financial and
operating results cannot be reasonably estimated with specificity
at this time, but the impact could be material. Rite Aid expressly
disclaims any current intention, and assumes no duty, to update
publicly any forward-looking statement after the distribution of
this release, whether as a result of new information, future
events, changes in assumptions or otherwise.
All references to “Company” and “Rite Aid” as used throughout
this section refer to Rite Aid Corporation and its affiliates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221118005242/en/
INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com
MEDIA: Terri Hickey (717) 975-5718 press@riteaid.com
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