Rite Aid successfully amends financing agreement

CAMP HILL, Pa. Rite Aid on Friday successfully amended its Receivables Financing Agreement, through which Rite Aid sells substantially all of its eligible third party pharmaceutical receivables to another entity, which then transfers those interests to various commercial paper vehicles, according to documents the company filed to the Security and Exchange Commission.

Under the amendment, Rite Aid will have a step-down in borrowing availability beginning Jan. 22 of approximately $100 million and an additional step-down of approximately $100 million beginning Feb. 20. To replace the loss of borrowing availability under the Receivables Financing Agreement, Rite Aid has executed a Commitment Letter with Citigroup Global Markets, pursuant to which Citi will act as sole lead arranger and sole bookrunning manager on a new second priority accounts receivable securitization term loan.  The Second Lien Facility will be up to $200 million, of which Citi has already committed to provide $100 million.

The Second Lien Facility is expected to close on or about Feb. 20 and mature on Sept. 14, 2010.

“Based upon … current levels of operations, planned improvements in … operating performance, the approval by [Rite Aid] stockholders of the proposed reverse stock split and the opportunities that [Rite Aid] believes the acquisition of Brooks Eckerd provides, [Rite Aid] believes that cash flow from operations together with available borrowings under the senior secured credit facility, sales of accounts receivable under the Existing Facility and the new Second Lien Facility that has been committed to by Citi and other sources of liquidity will be adequate to meet its requirements for working capital, debt service and capital expenditures for the foreseeable future,” the company stated.