Rite Aid Receives Court Approval of "First Day" Motions to Support Business Operations

Rhea-AI Summary

Rite Aid receives interim approval for debtor-in-possession financing in bankruptcy proceedings

Positive

• Rite Aid secures up to $3.45 billion in debtor-in-possession financing
• Court authorizes Rite Aid to continue paying wages, salaries, and benefits without interruption
• Rite Aid to pay vendors and suppliers in full for goods and services provided after filing date

Negative

• None.

Secures Interim Approval to Access Up to $3.45 Billion in Debtor-in-Possession Financing

Continues to Serve Customers and Deliver Healthcare Products and Services Across Retail and Online Platforms

PHILADELPHIA--(BUSINESS WIRE)-- Rite Aid Corporation (OTC: RADCQ) (“Rite Aid” or the “Company”) today announced that it has received approvals from the U.S. Bankruptcy Court for the District of New Jersey for its “First Day” motions related to the Company’s voluntary Chapter 11 petitions filed on October 15, 2023.

The Court granted interim approval to access up to $3.45 billion in debtor-in-possession financing from certain of its lenders. This financing is expected to provide sufficient liquidity to support the Company throughout this process. Among other things, the Court has authorized the Company to continue to pay associate wages, salaries and benefits without interruption, pay vendors and suppliers in full for goods and services provided on or after the filing date of October 15, 2023, and otherwise continue to deliver leading healthcare products and services across its retail and online platforms.

“We are pleased to have received Court approval of these critical First Day motions, which will enable Rite Aid to continue serving our customers and meeting their pharmacy needs throughout this process,” said Jeffrey S. Stein, Chief Executive Officer and Chief Restructuring Officer of Rite Aid. “With the support of certain of our lenders and the majority of our bondholders, we look forward to moving through this process and emerging as a stronger company, well-positioned for long-term success. We thank our associates, partners, suppliers and vendors for their continued support and our associates for their hard work and dedication.”

As previously announced, Rite Aid reached an agreement in principle with certain of its senior secured noteholders on the terms of a financial restructuring plan that will allow the Company to accelerate its ongoing business transformation. Implementing the contemplated restructuring plan will significantly reduce the Company’s debt, increase its financial flexibility and enable it to execute on key initiatives.

Additionally, as previously announced, Rite Aid has also entered into an agreement with MedImpact Healthcare Systems, Inc. (“MedImpact”), an independent pharmacy benefit solutions company, pursuant to which MedImpact will acquire Rite Aids’ Elixir Solutions business. Under the terms of the agreement, MedImpact will serve as the “stalking horse bidder” in a court-supervised sale process under section 363 of the U.S. Bankruptcy Code. Accordingly, the proposed transaction is subject to higher and better offers, court approval and other customary conditions.

Elixir Solutions is operating normally and continuing to serve clients, plan sponsors, members and customers as usual. Elixir Insurance is not included in Rite Aid’s Chapter 11 process or the proposed transaction with MedImpact, and it is continuing to operate and serve members as usual.

Additional Information

Additional information regarding the Company’s court-supervised process is available at www.riteaidrestructuring.com. Court filings and other information related to the proceedings are available on a separate website administrated by the Company’s claims agent, Kroll, at https://restructuring.ra.kroll.com/RiteAid; by calling Kroll toll-free at (844) 274-2766, or (646) 440-4878 for calls originating outside of the U.S. or Canada; or by emailing Kroll at RiteAidInfo@ra.kroll.com.

Kirkland & Ellis LLP is serving as legal advisor, Guggenheim Securities is serving as investment banker and Alvarez & Marsal is serving as transformation officer and financial advisor to the Company.

About Rite Aid

Rite Aid is a full-service pharmacy that improves health outcomes. Rite Aid is defining the modern pharmacy by meeting customer needs with a wide range of vehicles that offer convenience, including retail and delivery pharmacy, as well as services offered through our wholly owned subsidiaries, Elixir, Bartell Drugs and Health Dialog. Elixir, Rite Aid’s pharmacy benefits and services company, consists of accredited mail and specialty pharmacies, prescription discount programs and an industry leading adjudication platform to offer superior member experience and cost savings. Health Dialog provides healthcare coaching and disease management services via live online and phone health services. Regional chain Bartell Drugs has supported the health and wellness needs in the Seattle area for more than 130 years. Rite Aid employs more than 6,100 pharmacists and operates more than 2,100 retail pharmacy locations across 17 states. For more information, visit www.riteaid.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes statements that may constitute “forward-looking statements,” including expectations regarding the Company’s business plan and initiatives, the Company’s ability to continue to operate its business as currently contemplated, the effect of the Chapter 11 reorganization and the sufficiency of the financing package described above, including the ability to access the portion of the financing that is not currently accessible, the Company’s ability to emerge from the Chapter 11 reorganization as a stronger and more competitive enterprise, the Company’s continued engagement in discussions with the potential bidders regarding the Company’s sale processes for all, or a portion of the Company’s assets, including the Company’s ability to consummate any particular sale transaction, and other statements regarding the Company’s plans and strategy. When used in this document, the words “will,” “target,” “expect,” “continue,” “believe,” “seek, “anticipate,” “estimate,” “intend,” “could,” “would,” “strives” and similar expressions are generally intended to identify forward-looking statements. These statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. A number of important factors could cause actual results of the Company and its subsidiaries to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, risks and uncertainties outlined in the risk factors detailed in Item 1A. “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended March 4, 2023 (as filed with the Securities and Exchange Commission (“SEC”) on May 1, 2023) and other risk factors identified from time to time in the Company’s filings with the SEC. Readers should carefully review these risk factors, and should not place undue reliance on the Company’s forward-looking statements. The Company undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231017882369/en/

INVESTORS:

Byron Purcell

(717) 975-3710

investor@riteaid.com

MEDIA:

Joy Errico

(717) 975-5718

press@riteaid.com

Source: Rite Aid Corporation

FAQ

What approvals did Rite Aid receive from the U.S. Bankruptcy Court?

Rite Aid received approvals for its 'First Day' motions related to its voluntary Chapter 11 petitions.

How much debtor-in-possession financing did Rite Aid secure?

Rite Aid secured up to $3.45 billion in financing.

What is Rite Aid authorized to do during the bankruptcy process?

Rite Aid is authorized to continue paying wages, salaries, and benefits, as well as pay vendors and suppliers in full for goods and services provided after the filing date.

What is the purpose of Rite Aid's financial restructuring plan?

The plan aims to reduce the company's debt, increase financial flexibility, and enable the execution of key initiatives.

What is the proposed transaction between Rite Aid and MedImpact?

MedImpact will acquire Rite Aid's Elixir Solutions business as the 'stalking horse bidder' in a court-supervised sale process.

Is Elixir Insurance included in Rite Aid's Chapter 11 process?

No, Elixir Insurance is not included and will continue to operate as usual.