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Fitch slashes Rite Aid
Fitch Ratings said it downgraded Rite Aid Corp.'s long-term issuer default rating to C from B- following the proposed tender for its about $485 million of secured bonds due 2025; the 2025 notes have been dropped to CCC/RR1 from BB-/RR1.
Rite Aid is offering bondholders up to $750 per $1,000 of notes tendered below par but above recent trading prices. The holders must agree to the release of collateral and certain covenants. If most bondholders tender and consent to the release of security and covenants, any bonds not tendered would be stripped of their collateral.
“The downgrade reflects Fitch's view that the proposed tender offer is a distressed debt exchange (DDE), as it requires bondholders to consider a below-par tender offer or risk collateral and covenants being stripped from the notes. Upon completion of the exchange, Fitch would downgrade the IDR and 2025 notes to RD to reflect a restricted default,” the agency said in a press release.
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