Fitch rates Rite Aid loan BB-, notes CCC+

Fitch Ratings said it assigned a BB- rating with recovery rating of RR1 to Rite Aid Corp.'s new $500 million second-lien term loan due 2021.

Fitch also assigned a CCC+ with RR5 recovery rating to its new $810 million of 6¾% senior guaranteed unsecured notes due in 2021.

The proceeds are intended to refinance Rite Aid's $500 million of 7½% senior second-lien notes due 2017 and $810 million of 9½% guaranteed unsecured notes due 2017.

The company has an issuer default rating of B-, secured revolving credit facility and term loans rating of BB- with a recovery rating of RR1, first- and second-lien senior secured notes rating of BB- with a recovery rating of RR1, guaranteed senior unsecured notes rating of CCC+ with a recovery rating of RR5 and non-guaranteed senior unsecured notes rating of CCC with a recovery rating of RR6.

Post the February and current re-financings, Rite Aid's annual interest will decrease by $85 million and debt maturities will have been pushed out to 2019, Fitch said.

The outlook is stable.

The ratings reflect Rite Aid's high leverage and operating statistics that significantly trail its two major competitors, along with its strong market share position as the third largest U.S. drug retailer, the agency said.

The ratings also consider management's concerted efforts to improve the productivity of its store base and manage liquidity through a series of re-financings that have pushed out major debt maturities to 2019, working capital reductions and other cost-cutting initiatives, Fitch said.

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