Duane Reade closes senior secured notes offering

NEW YORK Manhattan-based pharmacy retailer Duane Reade has closed its offering of $300 million of 11.75% senior secured notes due 2015.

“We are very pleased to complete this financing which reduces our leverage, improves our financial flexibility, and provides long-term capital support for the continued transformation of Duane Reade,” stated John Lederer, president and CEO of Duane Reade.

The notes were priced at 97.417%, representing a yield to maturity of 12.375%. The notes were issued in a private offering that was exempt from the registration requirements of the Securities Act of 1933.

The issuers used the net proceeds from the notes offering, together with a portion of the proceeds from a $125 million preferred equity investment by entities associated with Oak Hill Capital Partners, to purchase approximately $205 million of the issuers’ senior Secured floating rate notes due 2010, approximately $143.3 million of the issuers’ 9.75% senior subordinated notes due 2011 and pay any related consent fees in the issuers’ previously-announced cash tender offer for such securities and to optionally redeem approximately $5 million of the floating rate notes, which were not tendered in the offers, pursuant to the optional redemption notice given Monday.

The offer and sale of the notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent such registration or an exemption from the registration requirements of such act.