Pricing is expected tomorrow, March 19, following an investor call at 10:30 a.m. EDT.
Rite Aid is using proceeds to finance its previously announced acquisition of Envision Pharmaceutical Services. Call protection on the notes is for three years, then at par plus 75% of the coupon, and the equity clawback is standard at 35% at par plus the coupon within the first three years. The notes will come under Rule 144A for life and leads are guiding investors toward CCC+/B3/B+ ratings.
As reported in February, Rite Aid will acquire EnvisionRx from sponsor TPG, paying approximately $1.8 billion in cash and $200 million in Rite Aid stock, or approximately 27.9 million shares, the filing shows. If the acquisition is not completed on or prior to Sept. 24, 2015, the company may use a dollar amount equal to the net proceeds of this offering to refinance certain existing debt, including the tranche 1 and 2 term loans, the 9.25% notes or the 8% notes, sources indicate. As well, if the acquisition does not close, the new notes can be redeem at 101% of par plus accrued interest.
Rite Aid last tapped the bond market in June 2013, when it placed $810 million of the 6.75% notes at the midpoint of talk, at par, after essentially a double upsizing. Recall that the drugstore chain used proceeds to take out all of its prior-benchmark 9.5% notes due 2017 that were issued in 2007 to fund the purchase of the Brooks and Eckerd drugstore chains from Jean Coutu. Today the 6.75% notes were offered at 105.5, yielding 5.28%, up a quarter of a point from recent levels, trade data show. – Joy Ferguson/Matt Fuller
