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 that it has commenced a tender offer
(the “Tender Offer”) to purchase for cash up to $200 million
aggregate purchase price (not including any accrued and unpaid
interest, and as such amount may be increased or decreased by the
Company, the “Aggregate Maximum Purchase Price”) of the Company’s
outstanding 7.500% Senior Secured Notes due 2025 (the “Notes”).
In connection with the Tender Offer, the Company is also
soliciting consents (the “Consents”) from registered holders (each,
a “Holder” and, collectively, the “Holders”) of the Notes (the
“Consent Solicitation”) to proposed amendments to the indenture
governing the Notes (the “Indenture”), providing for, among other
things, (i) the elimination of substantially all of the restrictive
covenants and certain events of default under the Indenture with
respect to the Notes and (ii) the release of all the collateral
securing the obligations of the Company and the subsidiary
guarantors from time to time party thereto (the “Guarantors”) under
the Notes (the “Proposed Amendments”). In the event of any
proration of the Notes, the Consents delivered shall be null and
void.
We are conducting the offer to improve the Company’s capital
structure by reducing debt and interest expense and extending our
debt maturity profile. On or prior to the settlement date for the
offer, we expect to enter into certain amendments to the Company’s
existing credit agreement governing its existing senior secured
asset-based revolving credit facility and senior secured term loan
facility providing for, among other things, an increase in the
available borrowing commitments thereunder, on terms and conditions
satisfactory to us in our sole discretion, 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.
The terms and conditions of the Tender Offer and the Consent
Solicitation are described in an Offer to Purchase and Consent
Solicitation Statement, dated November 3, 2022 (the “Offer to
Purchase and Consent Solicitation Statement”). The following table
summarizes the material pricing terms of the Tender Offer.
Title of Notes
CUSIP Number
Aggregate Principal
Amount Outstanding
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
$
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 Tender Offer and the Consent Solicitation will expire
immediately after 11:59 p.m., New York City time, on December 2,
2022, unless extended or earlier terminated by the Company (the
“Expiration Time”). 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 5:00 p.m., New York City time, on November 17, 2022 (such date
and time, as it may be extended, the “Early Tender Deadline”) and
not validly withdrawn at any time on or prior to 5:00 p.m., New
York City time, on November 17, 2022, unless extended (such date
and time, as it may be extended, 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” 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 21, 2022, unless extended or earlier terminated by us with
respect to the Offer in our sole discretion (the “Early Settlement
Date”). The Final Settlement Date is expected to be on December 6,
2022, unless extended or earlier terminated by us with respect to
the Tender Offer in our sole discretion (the “Final Settlement
Date”). Holders may not tender their Notes pursuant to the Tender
Offer without delivering their Consents in the Consent
Solicitation.
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. In the event of any proration of the
Notes tendered, the Consents delivered shall be null and void and
the proposed amendments will not be operative.
The consummation of the Tender Offer and the Consent
Solicitation 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 having
obtained certain amendments to the Company’s existing credit
agreement governing its existing senior secured asset-based
revolving credit facility and senior secured term loan facility
providing for, among other things, an increase in the available
borrowing commitments thereunder, on terms and conditions
satisfactory to us in our sole discretion, 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. The Tender Offer is not conditioned on any minimum
amount of Notes being tendered or the receipt of Requisite Consents
(as defined below). We reserve the right, but are under no
obligation, to waive any and all of the conditions of the Offer and
the Consent Solicitation at any time, in each case without
extending the Early Tender Deadline, the Withdrawal Deadline or the
Expiration Time for the Offer or otherwise reinstating withdrawal
or revocation rights of Holders, subject to applicable law. The
tender offer could adversely impact the Company’s credit ratings
but are expected to result in improved leverage and reduced
interest expense while maintaining strong liquidity.
In order for the Proposed Amendments to be adopted with respect
to the Notes, the Consents must be received in respect of at least
a majority of the principal amount of the Notes then outstanding
(excluding any Notes owned by the Company or any of its affiliates)
(the “Requisite Consents”). Assuming receipt of the Requisite
Consents, the Company expects to execute and deliver to the Trustee
and the Notes Collateral Agent (each as defined below) a
supplemental indenture (the “Supplemental Indenture”) to the
Indenture and amendments to certain related security agreements
(collectively, the “Amended Documents”) giving effect to the
Proposed Amendments, promptly following the later of the receipt of
the Requisite Consents and the Withdrawal Deadline. The Amended
Documents will become effective when executed by the Company, the
Guarantors and The Bank of New York Mellon Trust Company, N.A., as
trustee (the “Trustee”) and as notes collateral agent (the “Notes
Collateral Agent”). However, the Proposed Amendments will become
operative only upon our acceptance for purchase of at least a
majority of the principal amount of the Notes then outstanding
(excluding any Notes owned by the Company or any of its affiliates)
and payment therefor. Holders of Notes may not consent selectively
with respect to certain of the Proposed Amendments, or tender Notes
without consenting to the Proposed Amendments with respect to such
Notes. In the event of any proration of the Notes tendered, the
Consents delivered shall be null and void and the Proposed
Amendments will not become operative.
Any Notes validly tendered and related Consents validly
delivered may be withdrawn or revoked from the Tender Offer and the
Consent Solicitation on or prior to the Withdrawal Deadline. Any
Notes validly tendered and related Consents validly delivered on or
prior to the Withdrawal Deadline that are not validly withdrawn or
revoked on or prior to the Withdrawal Deadline may not be withdrawn
or revoked thereafter, except as required by law. In addition, any
Notes validly tendered and related Consents validly delivered after
the Withdrawal Deadline may not be withdrawn or revoked, except as
required by law.
Subject to the satisfaction or waiver of the conditions to the
Tender Offer, if the Company accepts for purchase any Notes validly
tendered and Consents validly delivered on or prior to the Early
Tender Deadline and not validly withdrawn (or Consents revoked) on
or prior to the Withdrawal Deadline, such Notes and Consents will
be accepted for purchase in priority to other Notes and Consents
validly tendered or delivered pursuant to the Tender Offer and the
Consent Solicitation 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 and Consents that are validly tendered or
delivered after the Early Tender Deadline will be accepted for
purchase and any Notes and Consents 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 and the Consent Solicitation. Global Bondholder
Services Corporation has been retained to serve as the tender and
information agent (the “Tender and Information Agent”) for the
Tender Offer and the Consent Solicitation. Questions regarding the
Tender Offer and the Consent Solicitation 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 or the
Consents, and none of the Company nor any of its affiliates has
authorized any person to make any such recommendation. The Tender
Offer and the Consent Solicitation are made only by the Offer to
Purchase and Consent Solicitation Statement. The Tender Offer and
the Consent Solicitation 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 and the Consent
Solicitation to be made by a licensed broker or dealer, the Tender
Offer and the Consent Solicitation 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 and Consent
Solicitation. 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/20221103006280/en/
INVESTORS: Byron Purcell (717) 975-3710 investor@riteaid.com
MEDIA: Terri Hickey (717) 975-5718 press@riteaid.com
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