Yesterday, the U.S.-based drugstore chain retailer,
Rite Aid Corporation
) raised the offering of senior notes to $810 million. Earlier,
this week, the company had announced its intention to offer $400
million senior notes maturing in 2021.
This is the second time in June that Rite Aid is implementing
a refinancing scheme. The new senior notes will carry a coupon
rate of 6.75% and mature in 2021. The offering is expected to
close on Jul 2, 2013.
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 2017.
The company informed this separately by revealing its cash
tender offer to buy all of its outstanding $810 million worth of
senior notes carrying a coupon rate of 9.5% that will mature in
2017. As part of the offer, the company is also seeking consent
for amendments in the senior notes. Unless extended or terminated
earlier, the particular offer will expire at midnight on Jul 16,
As per the company's previous announcement, the fees, expenses
and charges related to the refinancing transactions will weigh
upon its financial results - including net income, 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 reduce 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 the first quarter and fiscal 2014. Rite
Aid, which trails
CVS Caremark Corp.
) in terms of store count, anticipates net income for the quarter
in the range of $75-$90 million or 8-9 cents per share. Moreover,
the company expects adjusted EBITDA in the range of $335-$345
For fiscal 2014, Rite Aid 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
Avis Budget Group Inc.
), a leading global car rental enterprise. 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, like the existing
facility matures in 2019.
We believe the act of lowering interest rate on the existing
loan facility and redeeming high-cost debt will enable companies
to reduce corporate interest expenses, and imparts financial
AVIS BUDGET GRP (CAR): Free Stock Analysis
CVS CAREMARK CP (CVS): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
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