Rite Aid launches $400 million term loan at Libor plus 650 bps

By Sara Rosenberg

New York, May 26 - Rite Aid Corp. held a conference call at 2 p.m. ET on Tuesday to launch a proposed $400 million term loan due 2015, according to a market source.

Citigroup, Bank of America, Wells Fargo and GE Capital are the joint lead arrangers on the deal, with Citi the left lead.

The term loan is talked at Libor plus 650 basis points with a Libor floor and an original issue discount that is still to be determined, the source said.

Proceeds will be used to refinance the company's $145 million term loan tranche 1 due 2010, and repay and cancel a portion of the commitments outstanding under its revolver.

The deal was launched to new and existing lenders.

In conjunction with the term loan, the company launched an amendment to its existing credit facility to, among other things, allow for the new debt and the completion of a refinancing plan.

In an 8-K filed with the Securities and Exchange Commission, the company said that the new term loan is part of a comprehensive plan to refinance its September 2010 debt maturities, including its accounts receivable securitization programs.

The refinancing is hoped to be done through a combination of a new revolver, new term loans, the issuance of high-yield notes, which may be secured on a first- or second-priority basis or unsecured, or the entry into a new securitization program.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

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