Rite Aid refinancing effort could include high-yield bond offering

By Paul A. Harris and Sara Rosenberg

St. Louis, May 26 - Rite Aid Corp. is considering a sale of high-yield bonds to help refinance its 2010 maturities, according to an 8-K document that the company filed with the Securities and Exchange Commission on Tuesday.

Funds for the refinancing are targeted to come from 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, according to the 8-K.

The company is pursuing amendments to its existing credit facility in order to be able to go forward with its refinancing plans, according to market sources.

On Tuesday Rite Aid held a conference call to launch a proposed $400 million Libor plus 650 basis points term loan due 2015 (B3/B+), sources added.

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

In an otherwise quiet Tuesday session in the high-yield secondary market, Rite Aid bonds were active, according to a dealer, who said that they were up 2 points to 3 points on news of the refinancing plans.

The dealer characterized the refinancing as an "incremental positive," especially with respect to the Camp Hill, Pa.-based drugstore chain's near-term maturities.

Rite Aid's 6 7/8% notes due 2013 traded at 58½ on Tuesday, according to a buyside source.

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