Fred’s plans $1.05 billion asset-based loan for acquisition

By Sara Rosenberg

New York, Dec. 20 – Fred’s Inc. has received a commitment for an up to $1.05 billion senior secured asset-based credit facility to help fund its acquisition of 865 stores and certain assets related to store operations from Rite Aid Corp., according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Bank of America Merrill Lynch and Regions Bank are the leads on the deal.

The asset-based facility consists of an $850 million revolver and letter-of-credit facility and a $200 million term loan available in a single draw 90 days after the initial closing.

In addition, the company has received a commitment for an up to $600 million term loan, which will be secured by a first-lien on certain real estate and equipment and a second-lien on the asset-based loan collateral.

Bank of America Merrill Lynch, TPG Specialty Lending Inc., Crystal Financial LLC, Gordon Brothers Finance Co. LLC, Pathlight Capital LLC, Tennenbaum Capital Partners LLC and Great American Capital Partners LLC are the underwriters on the term loan.

Under the agreement, the Rite Aid stores will be bought for $950 million in cash.

Closing is expected to take several months after Walgreens Boots Alliance’s proposed acquisition of Rite Aid is completed, and is subject to approval by the Federal Trade Commission as well as customary regulatory approvals and conditions.

Fred’s is a Memphis, Tenn.-based operator of discount general merchandise stores and specialty pharmacy-only locations.

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