Rite-Aid gives price talk on $800 million two-part note offering

By Paul A. Harris

St. Louis, Feb. 14 - Rite-Aid Corp. set price talk Wednesday for both tranches of its $800 million offering of notes, according to an informed source.

The Camp Hill, Pa.-based drugstore chain talked a $300 million tranche of 10-year senior secured second-lien notes (B3/B+/BB-) at the 7½% area. The secured notes come with five years of call protection.

Meanwhile Rite-Aid talked a $500 million tranche of eight-year senior unsecured notes (Caa2/B-/CCC+) at the 8 5/8% area. The unsecured notes come with four years of call protection.

Pricing is set for Thursday morning.

Citigroup has the books for the note offering, which has been registered with the Securities and Exchange Commission. Wachovia Securities and Barclays Capital are co-managers.

Proceeds will be used to call $300 million of the company's 9½% senior secured notes due February 2011 at 104.75 and to replenish its $1.75 billion revolver, which was used to retire all of its $250 million outstanding 4¾% convertible notes due December 2006 and all $185 million of 7 1/8% senior notes due January 2007. Proceeds may also be used for general corporate purposes.

Rite-Aid is acquiring Canadian drug retailer Jean Coutu Group's U.S. operations, including the Brooks and Eckerd chains.

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