Rite Aid gets approval of first-day motions, interim DIP loan access

By Sarah Lizee

Olympia, Wash., Oct. 17 – Rite Aid Corp. has received approval from the U.S. Bankruptcy Court for the District of New Jersey for the first-day motions related to its Chapter 11 petition filed on Sunday, according to a press release.

The court granted interim approval to access up to $3.45 billion of debtor-in-possession financing from some of the company’s lenders, with Bank of America, NA as administrative agent and collateral agent.

The financing consists of a $2.85 billion revolver and a $400 million first-in, last-out term loan.

Proceeds will be used to repay all debt under the company’s existing credit facilities, to fund the Chapter 11 cases, to provide working capital and to make other payments during the proceedings.

The facility is set to mature in one year.

The revolver will bear interest at SOFR plus 325 basis points, and the term loan will bear interest at SOFR plus 525 bps (subject to downward adjustment to 475 bps following certain paydown events).

There is a 1% upfront fee payable at closing.

The company has also lined up a separate $200 million DIP term loan with Bank of America as administrative agent and collateral agent.

Proceeds will be used to fund the cases, make certain other payments and provide working capital.

The facility is set to mature in one year and bear interest at SOFR plus 750 bps.

The court also authorized the company to continue to pay associate wages, salaries and benefits without interruption, pay vendors and suppliers in full for goods and services provided on or after the filing date and otherwise continue to deliver health care products and services across its retail and online platforms.

“We are pleased to have received court approval of these critical first-day motions, which will enable Rite Aid to continue serving our customers and meeting their pharmacy needs throughout this process,” Jeffrey S. Stein, chief executive officer and chief restructuring officer of Rite Aid, said in the Tuesday morning release.

“With the support of certain of our lenders and the majority of our bondholders, we look forward to moving through this process and emerging as a stronger company, well-positioned for long-term success.”

As previously reported, Rite Aid said it has reached an agreement in principle with some of its senior secured noteholders on the terms of a financial restructuring plan that will allow the company to accelerate its ongoing business transformation.

Implementing the contemplated restructuring plan will significantly reduce the company’s debt, increase its financial flexibility and enable it to execute key initiatives, Rite Aid said.

Rite Aid has also entered into an agreement with MedImpact Healthcare Systems, Inc., an independent pharmacy benefit solutions company, through which MedImpact will acquire Rite Aids’ Elixir Solutions business.

MedImpact will act as the stalking horse bidder in a court-supervised sale process. The proposed purchase price is $575 million plus assumed liabilities.

The proposed transaction is subject to higher and better offers, court approval and other customary conditions.

Rite Aid said Elixir Solutions is operating normally and continuing to serve clients, plan sponsors, members and customers as usual.

Elixir Insurance is not included in Rite Aid’s Chapter 11 process or the proposed transaction with MedImpact, and it is continuing to operate and serve members as usual, Rite Aid noted.

Rite Aid is a full-service pharmacy with headquarters in Philadelphia. The company filed bankruptcy on Oct. 15 under Chapter 11 case number 23-18993.

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