Rite Aid Corporation (NYSE: RAD) (“Rite Aid” or the “Company”)
today announced that it has commenced cash tender offers (the
“Tender Offers”) to purchase up to $100 million aggregate principal
amount of its outstanding 7.70% Senior Notes due 2027 (“2027
Notes”) and 6.875% Senior Notes due 2028 (the “2028 Notes” and
together with the 2027 Notes, the “Notes”). The Tender Offers
support the Company’s objective to reduce its total indebtedness
while managing its liquidity and interest expense.
The following table sets forth certain material terms of the
Tender Offers:
Series of Notes
CUSIP Number/ISIN
Aggregate Principal Amount
Outstanding (in millions)
Dollars per $1,000 Principal
Amount of Notes(1)
Tender Offer
Consideration
Early Tender Premium
Total Consideration
(2)
7.70% Senior Notes due 2027
767754AJ3 / US767754AJ35
$270.461
$560
$50
$610
6.875% Senior Notes due 2028
767754AR5 / US767755AR50 / U76659AF5 /
USU76659AF59
$68.442
$560
$50
$610
(1)
Excludes accrued and unpaid interest on
the Notes.
(2)
Includes the Early Tender Premium.
The Company also announced that it recently completed a
privately negotiated purchase from a noteholder and its affiliated
funds of $84.1 million aggregate principal amount of the Notes at
the same purchase prices as the “Total Consideration” set forth in
the table above. The Company intends to fund this privately
negotiated repurchase and the Tender Offers with borrowings under
its senior secured revolving credit facility and other available
cash.
The Notes are unsecured and are not guaranteed by any of the
Company’s subsidiaries. Consequently, they are effectively
subordinated to all of the Company’s other outstanding
indebtedness.
In order to be eligible to receive the “Total Consideration,”
including the “Early Tender Premium,” for a series of Notes, as set
forth in the table above, holders must validly tender and not
withdraw their Notes at or prior to 5:00 p.m., New York City time,
on October 28, 2019 (such date and time, as it may be extended, the
“Early Tender Date”). Holders who tender their Notes after the
Early Tender Date will only be eligible to receive the “Tender
Offer Consideration”, which is the Total Consideration less the
Early Tender Premium. The Tender Offers will expire at 11:59 p.m.,
New York City time, on November 12, 2019, unless extended or
earlier terminated by Rite Aid (the “Expiration Date”).
In addition to the consideration set forth in the table above,
all holders of Notes accepted for purchase in the Tender Offers
will receive accrued and unpaid interest on such Notes from the
last interest payment date with respect to such Notes to, but not
including, the applicable settlement date.
In the Tender Offers, Rite Aid is offering to purchase up to
$100 million aggregate principal amount of Notes (subject to
increase as described below, the “Maximum Tender Amount”). If the
aggregate principal amount of Notes tendered exceeds the Maximum
Tender Amount, the Company will accept tendered Notes for purchase
on a pro rata basis (with Notes of both series being considered
together as a single class); provided, however, that all Notes
tendered at or prior to the Early Tender Date will be accepted for
purchase before any Notes tendered after the Early Tender Date are
accepted. Accordingly, if the Tender Offers are fully subscribed as
of the Early Tender Date, no Notes tendered after the Early Tender
Date will be accepted for purchase. The Company reserves the right,
but is under no obligation, to increase the Maximum Tender Amount
at any time.
Subject to the satisfaction or waiver of the conditions to the
Tender Offers, payment for Notes validly tendered at or prior to
the Early Tender Date and accepted for purchase is expected to
occur on October 30, 2019, the second business day following the
Early Tender Date. If any Notes tendered after the Early Tender
Date are accepted for purchase, payment for such Notes is expected
to occur promptly following the Expiration Date.
With respect to any valid tender in respect of a series of Notes
accepted by the Company, the Company will also pay the relevant
soliciting retail broker a fee of $2.50 per $1,000 principal amount
of such series of Notes, provided that such fee will only be paid
with respect to the first $200,000 aggregate principal amount of
each series of Notes tendered by any individual holder. The payment
of such soliciting broker fee with respect to a series of Notes is
subject to satisfaction of the conditions set forth in the Offer to
Purchase.
Tendered Notes may be withdrawn at or prior to 5:00 p.m., New
York City time, on October 28, 2019, unless extended by Rite Aid.
The complete terms and conditions of the Tender Offers are set
forth in Rite Aid’s Offer to Purchase dated October 15, 2019 (the
“Offer to Purchase”).
The Tender Offers are subject to, and conditioned upon, the
satisfaction or waiver of certain customary conditions described in
the Offer to Purchase. However, the consummation of the Tender
Offers is not conditioned upon any minimum amount of Notes being
tendered.
The dealer manager for the Tender Offers is BofA Merrill Lynch
(the “Dealer Manager”). Any questions regarding the terms of the
Tender Offers should be directed to the Dealer Manager at
(toll-free) 888-292-0070 or (collect) 980-388-3646.
Global Bondholder Services Corporation is the Information and
Depositary for the Tender Offers. Any questions regarding
procedures for tendering Notes or request for copies of the Offer
to Purchase should be directed to Global Bondholder Services
Corporation by any of the following means: by telephone at (866)
470-3900 (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/.
This press release is neither an offer to purchase nor a
solicitation of an offer to sell securities. No offer,
solicitation, purchase or sale will be made in any jurisdiction in
which such offer, solicitation, or sale would be unlawful. The
offer is being made solely pursuant to terms and conditions set
forth in the Offer to Purchase.
Rite Aid Corporation, which generated fiscal 2019 annual revenue
of $21.6 billion, is one of the nation's leading drugstore chains
with 2,466 stores in 18 states and pharmacy benefit management
(PBM) capabilities through EnvisionRxOptions and its affiliates. At
Rite Aid, we have a personal interest in our customers’ health and
wellness and deliver the products and services they need to lead
healthier lives.
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, statements
regarding Rite Aid's competitive position and ability to realize
its growth initiatives and operating efficiencies; and any
assumptions underlying any of the foregoing. 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
transactions described herein as well as any future transactions,
and any resulting charges or impact on our financial results; our
high level of indebtedness and our ability to make interest and
principal payments on our debt and satisfy the other covenants
contained in our debt agreements; general economic, industry,
market, competitive, regulatory and political conditions; our
ability to improve the operating performance of our stores in
accordance with our long term strategy; the impact of private and
public third-party payers continued reduction in prescription drug
reimbursements rates and their efforts to limit access to payor
networks, including through mail order; our ability to manage
expenses and our investments in working capital; outcomes of legal
and regulatory matters; changes in legislation or regulations,
including healthcare reform; our ability to achieve the benefits of
our efforts to reduce the costs of our generic and other drugs; the
inability to complete the sale of the remaining Rite Aid
distribution centers and related assets to Walgreens Boots
Alliance, Inc. due to failure to satisfy the minimal remaining
conditions applicable only to the distribution centers being
transferred at such distribution center closing; our ability to
successfully execute and achieve benefits from our recent change in
senior leadership; the potential for operational disruptions due
to, among other things, concerns of management, employees, current
and potential customers, other third parties with whom we do
business and shareholders; the success of any changes to our
business strategy that may be implemented under our new chief
executive officer and other management; our ability to achieve cost
savings through the organizational restructurings within the
anticipated timeframe, if at all; possible changes in the size and
components of the expected costs and charges associated with the
organizational restructuring plan; and the outlook for and future
growth of the Company. 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 Securities and Exchange
Commission, which you are encouraged to read. 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 place undue
reliance on these forward-looking statements, which speak only as
of the date they are made. Rite Aid expressly disclaims any current
intention 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20191015005551/en/
INVESTORS: Byron Purcell (717) 975-5809
MEDIA: Christopher Savarese (717) 975-5718
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