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.
PHILADELPHIA, November 18, 2022--(BUSINESS WIRE)--Rite Aid Corporation (NYSE: RAD) ("we," "us," "our" or the "Company") today announced the results, as of 5:00 p.m., New York City time, on November 17, 2022 (the "Original Early Tender Deadline") of its previously announced tender offer (the "Tender Offer") to purchase for cash up to $200 million aggregate purchase price (not including any accrued and unpaid interest, the "Aggregate Maximum Purchase Price") of the Company’s outstanding 7.500% Senior Secured Notes due 2025 (the "Notes"). The Company also announced that it is (i) extending the Original Early Tender Deadline and withdrawal deadline to 5:00 p.m., New York City time, on November 22, 2022, unless further amended in the Company’s sole discretion (as extended hereby, the "Early Tender Deadline" and "Withdrawal Deadline," respectively), (ii) waiving the Financing Condition (as defined below) and (iii) terminating the Consent Solicitation (as defined below). The final expiration time of the Tender Offer will also be extended and the Tender Offer will expire immediately after 11:59 p.m., New York City time, on December 7, 2022, unless further extended or earlier terminated by the Company (the "Expiration Time"). The Company does not intend to make any further amendments or changes to the Tender Offer.
The terms and conditions of the Tender Offer are described in an Offer to Purchase and Consent Solicitation Statement, dated November 3, 2022, as amended by this press release (as amended and supplemented, the "Offer to Purchase and Consent Solicitation Statement"). The following table summarizes the material terms of the Tender Offer and the aggregate principal amount of Notes validly tendered and not validly withdrawn at or prior to the Original Early Tender Deadline.
Title of Notes
7.500% Senior Secured Notes due 2025
Per $1,000 principal amount of Notes tendered and accepted for purchase.
Included in the Total Consideration for Notes tendered and accepted for purchase on or prior to the Early Tender Deadline.
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 November 28, 2022, unless extended or earlier terminated by us with respect to the Tender Offer in our sole discretion (the "Early Settlement Date"). The Final Settlement Date is expected to be on December 9, 2022, unless extended or earlier terminated by us with respect to the Tender Offer in our sole discretion (the "Final Settlement Date"). The change in structure will result in certain changes to the tax disclosure in the Offer to Purchase and Consent Solicitation Statement, which disclosure will be updated in a separate supplement to the Offer to Purchase and Consent Solicitation Statement.
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.
BofA Securities is the dealer manager (the "Dealer Manager") in the Tender Offer. Global Bondholder Services Corporation has been retained to serve as the tender and information agent (the "Tender and Information Agent") for the Tender Offer. Questions regarding the Tender Offer should be directed to BofA Securities by telephone at (980) 388-3646 (call collect) or (888) 292-0070 (toll-free) or by email at email@example.com. Requests for copies of the Offer to Purchase and Consent Solicitation Statement and other related materials should be directed to Global Bondholder Services Corporation by telephone at (855) 654-2014 (toll-free) or (212) 430-3774 (collect); by email at firstname.lastname@example.org; or by internet at the following web address: https://www.gbsc-usa.com/riteaid/.
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 Depository Trust Company nor any of their respective affiliates, makes any recommendation as to whether any holder should tender or deliver, or refrain from tendering or delivering, any or all of such holder’s Notes, and none of the Company nor any of its affiliates has authorized any person to make any such recommendation. The Tender Offer are made only by the Offer to Purchase and Consent Solicitation Statement. The Tender Offer are not being made to holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Tender Offer to be made by a licensed broker or dealer, the Tender Offer will be deemed to be made on behalf of the Company by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.
About Rite Aid
Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to Americans 365 days a year. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family through over 2,300 retail pharmacy locations across 17 states. Through Elixir, we provide pharmacy benefits and services to millions of members nationwide.
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 SEC, which you are encouraged to read. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of such risk factors.
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. Rite Aid expressly disclaims any current intention, and assumes no duty, to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
All references to "Company" and "Rite Aid" as used throughout this section refer to Rite Aid Corporation and its affiliates.
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