Rite Aid Announces Extension of Early Tender Deadline and Amendments to Its Previously Announced Cash Tender Offer and Consent Solicitation for Its 7.500% Senior Secured Notes Due 2025
Rite Aid Corporation (NYSE: RAD) announced the extension of its tender offer to purchase up to $200 million of its 7.500% Senior Secured Notes due 2025. The new deadlines for the early tender and withdrawal have been moved to November 22, 2022, while the final expiration is set for December 7, 2022. The refinancing strategy aims to enhance the company's debt maturity profile and reduce interest expenses. The company waived the financing condition to enhance liquidity, and has terminated the consent solicitation.
- Refinancing strategy expected to improve debt maturity profile.
- Aims to reduce overall interest expenses.
- Tender offer may adversely impact credit ratings.
- Uncertainty regarding total Notes that can be purchased due to proration.
Tender offer part of refinancing that is expected to include an increased revolving credit facility. Refinancing will improve debt maturity profile and result in decreased interest expense.
The terms and conditions of the Tender Offer are described in an Offer to Purchase and Consent Solicitation Statement, dated
Title of Notes |
CUSIP Number |
Aggregate
|
Aggregate
|
Aggregate
|
Early
|
Tender Offer
|
Total
|
||||||
|
U76659AX6 767754CK8 |
$ |
485,058,000 |
$ |
177,856,000 |
$ |
200,000,000 |
$ |
50.00 |
$ |
700.00 |
$ |
750.00 |
(1) |
Per |
||||||||||||
(2) |
Included in the Total Consideration for Notes tendered and accepted for purchase on or prior to the Early Tender Deadline. |
||||||||||||
(3) |
Does not include accrued and unpaid interest from the last date on which interest has been paid to, but excluding, the Early Settlement Date (as defined below) or the Final Settlement Date (as defined below), as applicable, that will be paid on the Notes accepted for purchase. |
||||||||||||
The consummation of the Tender Offer is subject to, and conditioned upon, the satisfaction or waiver of certain conditions described in the Offer to Purchase and Consent Solicitation Statement, including the Company entering into certain amendments to the Company’s existing credit agreement providing for, among other things, an increase in the available borrowing commitments thereunder, the net proceeds of which, together with cash on hand and/or other sources of liquidity, are sufficient to fund the purchase of the Notes validly tendered on or prior to the Early Tender Deadline and accepted for purchase (such condition, the “Financing Condition” and all such conditions, the “Tender Offer Conditions”). The Company continues to pursue such amendments but has sufficient liquidity to fund the Tender Offer so it has elected to waive the Financing Condition. The consummation of the Tender Offer will continue to be subject to, and conditioned upon, the satisfaction or waiver of the other Tender Offer Conditions described in the Offer to Purchase and Consent Solicitation Statement. The Tender Offer is not conditioned on any minimum amount of Notes being tendered. We reserve the right, but are under no obligation, to waive any and all of the remaining conditions of the Tender Offer at any time, in each case without extending the Early Tender Deadline, the Withdrawal Deadline or the Expiration Time or otherwise reinstating withdrawal rights of holders, subject to applicable law. The Tender Offer could adversely impact the Company’s credit ratings but is expected to result in improved leverage and reduced interest expense while maintaining strong liquidity and improving our debt maturity profile.
Additionally, the Company announced today that it has terminated its previously announced solicitation of consents (the “Consents”) from holders of the Notes (the “Consent Solicitation”) to certain proposed amendments (and the release of collateral) to the indenture governing the Notes (the “Indenture”) originally described in the Offer to Purchase and Consent Solicitation Statement. All Consents are heretofore deemed null and void and the proposed amendments shall not be effected. However, all Notes that were previously validly tendered and not validly withdrawn will remain tendered unless such holder withdraws its Notes on or prior to the Withdrawal Deadline pursuant to the procedures set forth in the Offer to Purchase and Consent Solicitation Statement. Additionally, holders that tendered their Notes on or prior to the date hereof (including Notes that were withdrawn and re-tendered) will not be deemed to deliver any Consent therewith.
Any Notes validly tendered may be withdrawn from the Tender Offer on or prior to the Withdrawal Deadline. Any Notes validly tendered on or prior to the Withdrawal Deadline that are not validly withdrawn on or prior to the Withdrawal Deadline may not be withdrawn thereafter, except as required by law. In addition, any Notes validly tendered after the Withdrawal Deadline may not be withdrawn, except as required by law.
Subject to the terms and conditions of the Tender Offer, including the Aggregate Maximum Purchase Price and proration, holders of Notes that are validly tendered on or prior to Early Tender Deadline and not validly withdrawn at any time on or prior to the Withdrawal Deadline will be eligible to receive the Total Consideration set forth in the table above, which includes the Early Tender Premium set forth in the table above. Holders of Notes tendering their Notes after the Early Tender Deadline, but on or prior to the Expiration Time, will only be eligible to receive the Tender Offer Consideration set forth in the table above, which is the Total Consideration less the Early Tender Premium. No tenders will be valid if submitted after the Expiration Time. The Early Settlement Date (as defined below) may occur, at our option, no earlier than the Early Tender Deadline. We reserve the right, in our sole discretion, to extend or forgo the Early Settlement Date, if any. In the event that we forgo the Early Settlement Date, all holders whose Notes are accepted for payment by the Company will receive payment on the Final Settlement Date.
In addition, holders of all Notes validly tendered and accepted for purchase pursuant to the Tender Offer will receive accrued and unpaid interest on such Notes from the last date on which interest has been paid to, but excluding, the Early Settlement Date or the Final Settlement Date, as applicable. The Early Settlement Date, if we choose to have one, is currently expected to be on or about
The aggregate purchase price of the Notes that may be purchased pursuant to the Tender Offer will not exceed the Aggregate Maximum Purchase Price. The Company reserves the right, but is under no obligation, to increase or decrease the Aggregate Maximum Purchase Price at any time, in each case without extending the Early Tender Deadline, the Withdrawal Deadline or the Expiration Date or otherwise reinstating withdrawal or revocation rights of holders, subject to applicable law, which could result in the Company purchasing a greater or lesser amount of the Notes in the Tender Offer. Acceptance of tenders of the Notes may be subject to proration if the aggregate purchase price of the Notes validly tendered and not validly withdrawn would exceed the Aggregate Maximum Purchase Price.
Subject to the satisfaction or waiver of the conditions to the Tender Offer, if the Company accepts for purchase any Notes validly tendered on or prior to the Early Tender Deadline and not validly withdrawn on or prior to the Withdrawal Deadline, such Notes will be accepted for purchase in priority to other Notes validly tendered or delivered pursuant to the Tender Offer after the Early Tender Deadline. Accordingly, if the Aggregate Maximum Purchase Price is reached in respect of tenders made on or prior to the Early Tender Deadline, no Notes that are validly tendered after the Early Tender Deadline will be accepted for purchase and any Notes accepted for purchase on the Early Settlement Date, if any, or the Final Settlement Date will be accepted on a prorated basis up to the amount of the Aggregate Maximum Purchase Price unless the Aggregate Maximum Purchase Price is increased up to an amount that would allow us to purchase all such Notes.
This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any security. No offer, solicitation, or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful.
None of the Company, its board of directors, the Dealer Manager, the Tender and Information Agent, the Trustee and the Notes Collateral Agent under the Indenture, the
About
Forward-Looking Statements
Statements in this release that are not historical, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, the expected timing and terms of the proposed Tender Offer. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to: risks related to the prolonged impact of the COVID-19 global pandemic and the emerging new variants, including the government responses thereto; the impact of COVID-19 on our workforce, operations, stores, expenses, and supply chain, and the operations or behaviors of our customers, suppliers and business partners; our ability to successfully implement our store closure program and other strategies; the impact of our high level of indebtedness, the ability to refinance such indebtedness on acceptable terms (including the impact of rising interest rates, market volatility, and continuing actions by the United States Federal Reserve) and our ability to satisfy our obligations and the other covenants contained in our debt agreements; outcome of pending or new litigation, including related to opioids, “usual and customary” pricing or other matters; our ability to monetize (and on reasonably available terms) the Centers of Medicare and Medicaid Services receivable created in our Part D business; general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions (including changes to laws or regulations relating to labor or wages), and regulatory conditions, including continued impacts of inflation or other pricing environment factors on our costs, liquidity and our ability to pass on price increases to our customers, including as a result of inflationary and deflationary pressures, a decline in consumer financial position, whether due to inflation or other factors, as well as other factors specific to the markets in which we operate; the impact of private and public third-party payers continued reduction in prescription drug reimbursements and efforts to encourage mail order; our ability to manage expenses and our investments in working capital; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; our ability to achieve cost savings and other benefits of our restructuring efforts within our anticipated timeframe, if at all; the outcome of our continuing efforts to monitor and comply with applicable laws, regulations, policies and procedures; and our ability to partner and have relationships with health plans and health systems.
These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to rely on these forward-looking statements, which speak only as of the date they are made.
The degree to which COVID-19 may adversely affect Rite Aid’s results and operations, including its ability to achieve its outlook for fiscal 2023 guidance, will depend on numerous evolving factors and future developments, which are highly uncertain, including, but not limited to, federal, state and local governmental policies and initiatives designed to reduce the transmission of COVID-19 and emerging new variants and how quickly and to what extent normal economic and operating conditions can resume. As a result, the impact on Rite Aid’s financial and operating results cannot be reasonably estimated with specificity at this time, but the impact could be material.
All references to “Company” and “Rite Aid” as used throughout this section refer to
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INVESTORS:
(717) 975-3710
investor@riteaid.com
MEDIA:
(717) 975-5718
press@riteaid.com
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