Rite Aid pushed debt maturities out to 2023 with new credit facility

By Devika Patel

Knoxville, Tenn., April 11 – Rite Aid Corp. has no debt maturities until 2023, greater financial flexibility and improved liquidity as a result of the refinancing of the company’s senior secured credit facility.

“On Dec. 20, 2018, we completed the refinancing of our senior secured credit facility,” chief financial officer Matt Schroeder said Thursday on the company’s earnings conference call for the fiscal fourth quarter and year ended March 2.

“As a result of this refinancing, we replaced our $2.7 billion revolving credit facility with a new facility that includes a $2.7 billion revolving credit facility and a $450 million term loan.

“These new credit facilities are scheduled to mature in December of 2023 with a springing maturity at Dec. 31, 2022 if we have not repaid or refinanced our 6 1/8% notes due in April of 2023 before that date.”

The company got a better interest rate on the new asset-based revolver.

“The interest rate on the revolver is improved by 25 basis points over the old revolving credit facility,” Schroeder said.

“Our covenants under the new senior secured credit facility remain substantially unchanged.”

The company now has no debt maturing until 2023, and liquidity stands at $1.7 billion.

“This important refinancing strengthens our balance sheet and gives us the flexibility to make investments necessary to execute our growth plan as well as provides the time needed to execute on our strategy,” Schroeder said.

The company’s net debt balance was about $3.3 billion as of March 2.

Borrowings under the new revolver bear interest at Libor plus a margin ranging from 125 bps to 175 bps, based on average availability. There is a fee from 25 bps to 37.5 bps on the daily unused amount of the revolver, which also depends on availability.

The term loan is advanced on a “first-in, last-out” basis and bears interest at Libor plus 300 bps.

Bank of America Merrill Lynch, Wells Fargo Bank, NA, Citigroup Global Markets, Inc., BMO Harris Bank NA, Capital One, NA, Fifth Third Bank, ING Capital LLC, MUFG Union Bank, NA, PNC Capital Markets LLC and SunTrust Bank are the joint lead arrangers and joint bookrunners.

Bank of America, NA is the administrative agent.

Wells Fargo and Citicorp North America, Inc. are co-syndication agents.

BMO Harris, Capital One, Fifth Third, ING, MUFG, PNC Bank and SunTrust Bank are the co-documentation agents.

Proceeds may be used for general corporate purposes.

In connection with the new credit facilities, Rite Aid terminated its amended and restated credit agreement dated June 27, 2001 with Citicorp North America, Inc. as administrative agent.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

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