Rite Aid $115 million mandatory convertible talked at 6.5% to 7.0% dividend, up 50%

By Ronda Fears

Nashville, Jan. 24 - Rite Aid Corp. launched $115 million of mandatory convertible preferreds after the market close with guidance for a 6.5% to 7.0% dividend and 50% initial conversion premium.

JPMorgan Securities is sole bookrunner of the registered deal, which is slated to price after Tuesday's close. Citigroup Global Markets Inc. is a co-manager.

The series E mandatory, with a par of 50, will be callable with a 150% threshold over the upper strike price. Holders will have dividend and takeover protection.

A $10 million greenshoe is available.

The Camp Hill, Pa.-based drugstore chain said it will use proceeds to redeem, at 105% plus any accrued dividends, its $103 million of series D cumulative convertible pay-in-kind preferreds. Any remaining net proceeds, the company said, will be used to purchase additional shares of series D preferred stock or for working capital and general corporate purposes.

Rite Aid shares closed Monday off 7 cents, or 1.87%, to $3.67. In after-hours trading, the stock lost another 7 cents, or 1.91%.

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