Drugstore chain retailer,
Rite Aid Corporation
) has come up with its second refinancing scheme in this month,
commencing a $400 million senior notes offering maturing in 2021.
The company plans to use the proceeds from this offering along
with its existing cash and borrowings to redeem an equivalent
amount of senior notes bearing an interest rate of 9.5% due in
AVIS BUDGET GRP (CAR): Free Stock Analysis
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The company expects the fees, expenses and charges related to the
refinancing transactions to weigh upon its financial results,
including net income and earnings per share, and guidance.
At the end of fiscal 2013, this Zacks Rank #2 (Buy) company had
$665.0 million borrowing outstanding under its senior credit
facility, and $115 million of outstanding letters of credit.
Earlier this month, the company had announced its first debt
refinancing transaction in an attempt to extend the maturity of
some debts and lower interest expenses. The transaction involves
a cash tender offer to redeem all of Rite Aid's 7.5% Senior
Secured Notes worth $500 million with proceeds from a new $500
million second-lien term loan, along with existing cash and
Along with its refinancing transaction in early June, Rite Aid
provided estimates for first-quarter 2014 and fiscal 2014. Rite
Aid, which trails
CVS Caremark Corp.
) in terms of store count, anticipates net income in the range of
$75-$90 million or 8-9 cents per share. Moreover, Rite Aid is
expecting adjusted EBITDA in the range of $335 million - $345
For fiscal 2014, the company raised its low-end adjusted EBITDA
guidance range to $1.090 billion from $1.075 billion, but it kept
its high-end guidance of $1.175 billion unchanged. However, Rite
Aid lowered its fiscal 2014 high-end adjusted earnings guidance.
The company now expects adjusted net income in the range of
$49-$189 million or 4-19 cents per share, compared with 4-20
cents forecasted earlier.
Another company that recently indulged in refinancing transaction
Avis Budget Group Inc.
), a leading global car rental company. As part of the
transaction, the company increased its term loan facility to $1
billion, from the existing $900 million, for a lower rate of
interest. However, the new term loan borrowing had the same
maturity as the existing facility of 2019.
The $1 billion term loan was refinanced at the LIBOR plus
interest rate of 2.25% subject to a LIBOR floor of 0.75%. This
represented savings of 75 basis points from the previous interest
rate of LIBOR plus 2.75%, subject to a LIBOR floor of 1%.
Simultaneously, the company announced the redemption of its $124
million worth of senior notes due 2018, bearing an interest rate
of 9.625%, eliminating the outstanding balance of its high-cost
We believe this act of curtailing interest rate on the existing
loan facility and redeeming its high-cost debt will enable the
company to save on its corporate interest expenses.