Fitch: Rite-Aid loans BB-

Fitch Ratings said it assigned a BB- rating with a recovery rating of RR1 to Rite Aid Corp.'s $343 million first-lien term loans due February 2018.

The outlook is stable.

The proceeds will be used to retire Rite Aid's $343 million tranche 3 term loan due June 4, 2014.

The refinancing provides slightly better pricing with the new term loans priced at Libor plus 325 basis points with a Libor floor of 1.5% versus the prior term loans priced at Libor plus 300 bps with a Libor floor of 3%, Fitch said.

The new loans also help stagger and extend the debt maturity profile with less than $15 million due 2011 and 2012 and $205 million due 2013, the agency said. Between 2014 and 2016, Rite Aid will have to contend with refinancing about $1 billion in debt annually, Fitch said.

The rating reflects Rite Aid's significant high leverage and limited capital for investment and operating statistics that significantly trail its two major competitors, the agency said.

The ratings also reflect Rite Aid's strong market share position as the third largest U.S. drug retailer and management's concerted efforts to improve the productivity of its store base and manage liquidity through working capital reductions and other cost cutting initiatives, Fitch said.

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