Rite Aid talks about increase to $500 million; Libor floor surfaces

By Sara Rosenberg

New York, May 28 - Rite Aid Corp. is considering upsizing its term loan due 2015 to $500 million from $400 million, according to a market source, who said that the books on the deal were closed on Thursday, but final terms have not yet been announced.

The term loan is talked at Libor plus 650 basis points with a 3% Libor floor and an original issue discount in the range of 95½ to 961/2.

Previously, the spread on the deal was known, but the floor and the discount were described as still to be determined.

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

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.

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 recently 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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