Rite Aid announces offering of senior secured notes

CAMP HILL, Pa. Rite Aid on Monday began preparations to execute against its fiscal plans that will satisfy the chain’s next significant debt hurdle in September 2010 — the $1.8 billion senior secured revolving credit facility.

The chain intends to offer $400 million aggregate principal amount of senior secured notes due 2016. The notes will be unsecured, unsubordinated obligations of Rite Aid and will be guaranteed by substantially all of Rite Aid's subsidiaries. The guarantees will be secured on a senior lien basis.

The offering is part of the previously announced plan to refinance Rite Aid's September 2010 debt maturities. Rite Aid said it has obtained the amendments to its senior secured credit facility necessary to complete the refinancing.

Also included in the refinancing is a new $525 million term loan due June 2015, $125 million more than previously announced, under Rite Aid's senior secured credit facility. Proceeds from the new term loan, which is scheduled to close on June 10, 2009, will be used to refinance the $145 million tranche one-term loan due September 2010 under Rite Aid's senior secured credit facility, repay and cancel a portion of the commitments outstanding under Rite Aid's existing $1.75 billion senior secured revolving credit facility also due September 2010, and for fees and other expenses.

As part of the refinancing, Rite Aid is also seeking to enter a new $1 billion senior secured revolving credit facility due September 2012, for which it has obtained $900 million in commitments. Rite Aid intends to use the net proceeds from the offering of the notes, together with borrowings under the new revolver, to repay the remaining amounts outstanding and replace Rite Aid's existing revolving credit facility and to fund related fees and expenses.