Settlement All-Cash: Rite Aid Amends Senior Secured Credit Facility
Wednesday February 27, 11:14 am Eastern Time
Press Release
SOURCE: Rite Aid Corporation
Rite Aid Amends Senior Secured Credit Facility
Reaches Agreement To Issue Senior Secured Notes Due 2006 As Final Payment of Settlement of Consolidated Securities Class Action Lawsuits
CAMP HILL, Pa.--(BUSINESS WIRE)--Feb. 27, 2002-- Reaffirms EBITDA Guidance for Fourth Quarter Fiscal 2002, Full
Year Fiscal 2003
Rite Aid Corporation (NYSE,PCX:RAD) announced today that it has amended its $1.9 billion senior secured credit facility, which will allow the company to issue senior secured notes, as has been agreed with the plaintiffs, as the final payment of its previously announced settlement of consolidated securities class action and derivative lawsuits against the company.
Under the settlement agreement, Rite Aid had the option to pay the $149.5 million balance due the class and derivative action plaintiffs in any combination of cash, common stock or notes. The company has already paid the $45 million cash portion of the settlement with proceeds from insurance.
In addition to providing room in the credit facility covenants for the new senior secured notes, the amendment also resets the covenant levels to allow the company more operating flexibility for the life of the credit facility, which matures in March 2005.
``We are pleased to have completed the amendment to our credit facility and appreciate the support of our lenders. The amendment allows us to complete the settlement of the shareholders suits by issuing notes instead of cash or common stock, which is in the best interest of our shareholders,'' said Bob Miller, Rite Aid chairman and chief executive offficer.
The interest rate on the credit facility, which includes a $1.4 billion term loan and a $500 million revolving credit facility, will increase from LIBOR plus 3.50% to LIBOR plus 3.75%. As a result of the new rate, the company said it expects annual cash interest expense under the credit facility to increase by approximately $4.0 million a year.
Until the judgement entered by the U.S. District Court for the Eastern District of Pennsylvania approving the settlement of the shareholder suits becomes final, the senior secured notes to be issued, which will mature in 2006, will bear interest at a floating rate.
When the judgement becomes final, the interest rate will be reset to the rate necessary to cause the notes to trade at par on that date.
In addition, the company reaffirmed its previously announced guidance of earnings before interest, taxes, depreciation and amortization, LIFO charges, losses from asset disposals, nonrecurring legal and accounting expenses and non-cash expenses (EBITDA) of $140 million for the fourth quarter of fiscal 2002, which ends March 2, 2002.
The company also reaffirmed EBITDA guidance of $530 million to $580 million for fiscal 2003, which ends March 1, 2003.
The company today will file a Current Report on Form 8-K with the Securities and Exchange Commission containing the amendment to the credit facility.
Questions concerning the distribution of the shareholder suits' settlement should be directed to co-lead counsel for the class: David Bershad (212-594-5300) and Sherrie Savett (215-875-3071).
Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of more than $14 billion and more than 3,500 stores in 28 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through the company's website at www.riteaid.com
This press release may contain forward-looking statements, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.
Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include our high level of indebtedness, our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our credit facilities and other debt agreements, our ability to improve the operating performance of our existing stores, and, in particular, our new and relocated stores in accordance with our long term strategy, the outcomes of pending lawsuits and governmental investigations, both civil and criminal, involving our financial reporting and other matters, competitive pricing pressures, continued consolidation of the drugstore industry, third-party prescription reimbursement levels, regulatory changes governing pharmacy practices, general economic conditions and inflation, interest rate movements, access to capital and merchandise supply constraints, and our failure to develop, implement and maintain reliable and adequate internal accounting systems and controls. Consequently, all of the forward-looking statements made in this press release are qualified by these and other factors, risks and uncertainties.
Readers are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Forward-looking statements can be identified through the use of words such as ``may'', ``will'', ``intend'', ``plan'', ``project'', ``expect'', ``anticipate'', ``could'', ``should'', ``would'', ``believe'', ``estimate'', ``contemplate'', ``possible'', and ``point''.
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Contact:
Rite Aid Corporation
Dave Jessick, 717/975-5750
or
Karen Rugen, 717/730-7766 |
