Attached files
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported): October 29, 2009 (October 26,
2009)
Rite
Aid Corporation
(Exact
name of registrant as specified in its charter)
|
Delaware
|
1-5742
|
23-1614034
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
Number)
|
30
Hunter Lane, Camp Hill, Pennsylvania 17011
(Address
of principal executive offices, including zip code)
(717)
761-2633
(Registrant's
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[
] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive
Agreement.
On
October 26, 2009 (the "Closing Date"), Rite Aid Corporation ("Rite Aid")
completed its previously announced offering (the "Offering") of $270 million
aggregate principal amount of its 10.250% senior secured notes due October 2019
(the "Notes") to qualified institutional buyers pursuant to Rule 144A, and
outside of the United States pursuant to Regulation S, under the Securities Act
of 1933, as amended (the "Securities Act"). The Notes are unsecured,
unsubordinated obligations of Rite Aid and are guaranteed by the same
subsidiaries (the "Subsidiary Guarantors") that guarantee Rite Aid's obligations
under its senior secured credit facility (including the Amended Revolver (as
defined below) and the Incremental Tranche 4 Term Loan (as defined below)), and
Rite Aid's outstanding 9.750% senior secured notes due 2016,10.375% senior
secured notes due 2016, 7.5% senior secured notes due 2017, 8.625% senior notes
due 2015, 9.375% senior notes due 2015 and 9.5% senior notes due
2017. The guarantees of the Notes are secured on a second priority
basis, pari passu with the secured guarantees of Rite Aid's 10.375% senior
secured notes due 2016 and 7.5% senior secured notes due 2017.
On
the Closing Date, Rite Aid also entered into certain incremental facility
amendments to its senior secured credit facility which (i) increased the maximum
commitments under the Company's existing senior secured revolving credit
facility from $1.0 billion to $1.175 billion (the "Amended
Revolver") and (ii) increased the Company's borrowings by
$125.0 million under its existing Tranche 4 Term Loan due 2015 (the
"Incremental Tranche 4 Term Loan," and together with the increased capacity
under the Amended Revolver, the "Incremental Facilities"). Rite Aid used the net
proceeds of the Offering and borrowings under the Incremental Tranche 4
Term Loan and the Amended Revolver to repay all amounts outstanding under Rite
Aid's accounts receivable securitization facilities, and for related fees and
expenses, including the prepayment fees associated with the repayment of the
amounts outstanding under Rite Aid's second lien securitization facility. Upon
prepayment of the securitization facilities, both securitization facilities were
terminated.
Borrowings
under the Amended Revolver will continue to bear interest, at Rite Aid's option,
at (i) an adjusted LIBOR rate with a floor of 3.00% per annum, plus the
Revolver Margin or (ii) the greater of (a) Citibank’s base rate with a
4.00% per annum base rate floor and (b) the federal funds rate plus 0.50%,
in each case plus the Revolver Margin. The “Revolver Margin” is 4.50% for LIBOR
borrowings and 3.50% for base rate borrowings, and after November 28, 2009,
can fluctuate depending on the amount of revolver availability, as specified in
Rite Aid's senior secured credit facility. Rite Aid is required to pay fees on
the daily unused amount of the Amended Revolver in an amount per annum equal to
1.00% until November 28, 2009 and thereafter in an amount per annum equal
to 1.00% or 0.75% depending on the amount of revolver availability. Amounts
drawn under the Amended Revolver become due and payable on September 30,
2012.
At
Rite Aid's option, the Tranche 4 Term Loan (including the Incremental Tranche 4
Term Loan) bears interest at a rate per annum equal to either (a) an
adjusted LIBOR rate (with a LIBOR floor of 3.00% per annum) plus 6.50% or
(b) the greater of (x) Citibank’s base rate (with a base rate floor of
4.00% per annum) and (y) the federal funds rate plus 0.50%, in each case
plus 5.50%. The Tranche 4 Term Loan (including the Incremental
Tranche 4 Term Loan) is
2
guaranteed
by the Subsidiary Guarantors. Rite Aid must make mandatory
prepayments of the Tranche 4 Term Loan (including the Incremental
Tranche 4 Term Loan, on a pro rata basis with any other term loan under its
senior secured credit facility and other senior obligations that require the
sharing of such prepayments, including Rite Aid's 9.750% senior secured notes
due 2016) with the proceeds of asset dispositions and casualty events (subject
to certain limitations). Rite Aid is also required to make mandatory
prepayments of the Tranche 4 Term Loan (including the Incremental
Tranche 4 Term Loan, on a pro rata basis with any other term loans under
its senior secured credit facility) with a portion of any excess cash flow
generated by Rite Aid and with the proceeds of certain issuances of equity and
debt (subject to certain exceptions). If at any time the total credit
exposure outstanding under Rite Aid's senior secured credit facility (including
the Incremental Facilities), and together with the principal amount of Rite
Aid's 9.750% senior secured notes due 2016, and the principal amount of any
other senior obligations exceeds the borrowing base, Rite Aid will be required
to make certain other mandatory prepayments to eliminate such
shortfall.
All
prepayments of the Tranche 4 Term Loan (including the Incremental
Tranche 4 Term Loan) occurring on or prior to the third anniversary of the
initial borrowing of the Tranche 4 Term Loans are subject to a prepayment
premium in an amount equal to (i) 5.0% of the principal amount prepaid if
such prepayment occurs on or prior to the first anniversary of such borrowing,
(ii) 3.0% of the principal amount prepaid if such prepayment occurs on or
prior to the second anniversary of such borrowing and (iii) 1.0% of the
principal amount prepaid if such prepayment occurs on or prior to the third
anniversary of such borrowing.
Copies
of the amendments implementing the Incremental Tranche 4 Term Loan and the
Amended Revolver are filed hereto as Exhibits 10.1 and 10.2, respectively, and
are incorporated herein by reference.
See
the disclosure in Item 2.03 below for disclosure regarding the Indenture (as
defined below). Such disclosure is incorporated by reference into
this Item 1.01.
Registration
Rights Agreement
On
October 26, 2009 (the "Closing Date"), the Company entered into a registration
rights agreement relating to the Notes, among the Company, the Subsidiary
Guarantors and Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Banc
of America Securities LLC and Goldman, Sachs & Co., as the initial
purchasers (the "Initial Purchasers") of the Notes (the "Registration Rights
Agreement"). The Registration Rights Agreement requires Rite Aid and
the Subsidiary Guarantors, at their cost, to among other things: (i) file a
registration statement with respect to the Notes within 150 days after the
Closing Date to be used in connection with the exchange of the Notes and related
guarantees for publicly registered notes and related guarantees with
substantially identical terms in all material respects (except for the transfer
restrictions relating to the Notes); (ii) use their commercially reasonable
efforts to cause the applicable registration statement to become effective under
the Securities Act within 210 days after the Closing Date; and (iii) use their
commercially reasonable efforts to effect an exchange offer of the Notes and the
related guarantees for registered notes and related guarantees within 270 days
after the Closing Date. In addition, under certain circumstances,
Rite Aid and the Subsidiary Guarantors may be required to file a shelf
registration statement to cover resales of the Notes.
3
Subject
to certain exceptions, if: (i) Rite Aid and the Subsidiary Guarantors fail to
file any of the registration statements required by the Registration Rights
Agreement on or before the date specified for such filing; (ii) any of such
registration statements are not declared effective by the SEC on or prior to the
date specified for such effectiveness; (iii) Rite Aid and the Subsidiary
Guarantors fail to consummate the exchange offer within 270 days after the
Closing Date; (iv) a shelf registration statement, if required, has not been
filed on or prior to the 30th day after Rite Aid's obligation to file a shelf
registration statement arises; (v) any required registration statement is filed
and declared effective but thereafter ceases to be effective during the
applicable period (each such event referred to in clauses (i) through (v) above,
a "Registration Default"), then Rite Aid will be obligated to pay additional
interest to each holder of the Notes that are subject to transfer restrictions,
with respect to the first 90-day period immediately following the occurrence of
a Registration Default, at a rate of 0.25% per annum on the principal amount of
the Notes that are subject to transfer restrictions held by such holder. The
amount of additional interest will increase by an additional 0.25% per annum
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of additional interest for all
Registration Defaults of 0.50% per annum on the principal amount of the Notes
that are subject to transfer restrictions. Following the cure of the
Registration Default, the accrual of additional interest will
cease. A Registration Default referred to in (v) above will be
deemed not to have occurred and be continuing in relation to a shelf
registration statement or the related prospectus if such Registration Default
has occurred solely as a result of the filing of a post-effective amendment to
such shelf registration statement and for such time as is reasonably necessary
to incorporate Rite Aid's annual audited financial information, quarterly
financial information or other required information where such post-effective
amendment is not yet effective and needs to be declared effective to permit
holders of the Notes to use the related prospectus and Rite Aid is using its
commercially reasonable efforts to have such post-effective amendment declared
effective.
A
copy of the Registration Rights Agreement is filed hereto as Exhibit 10.3 and is
incorporated herein by reference.
Item
2.03 Creation of a Direct Financial
Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a
Registrant
The
information regarding the Notes set forth in Item 1.01 above is incorporated
herein by reference.
The
Notes were issued pursuant to an indenture, dated as of October 26, 2009, among
the Company, The Bank of New York Mellon Trust Company, N.A., as trustee, and
the Subsidiary Guarantors (the "Indenture"). At any time and from
time to time, prior to October 15, 2012, Rite Aid may redeem up to a maximum of
35% of the original aggregate principal amount of the Notes with the net
proceeds of one or more equity offerings, at a redemption price equal to
110.250% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to, but not including, the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date); provided that: (i) at
least 65% of the original aggregate principal amount of the Notes remains
outstanding; and (ii) the redemption occurs within 75 days of the completion of
such equity offering upon not less
4
than
30 nor more than 60 days' prior notice. Prior to October 15, 2014,
Rite Aid may redeem some or all of the Notes by paying a "make-whole" premium
based on U.S. Treasury Rates. On or after October 15, 2014, and on or
after October 15 of the relevant year listed below, Rite Aid may redeem some or
all of the Notes at the prices listed below, plus accrued and unpaid interest,
if any, to, but not including, the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date): 2014 at a redemption price of 105.125%; 2015 at
a redemption price of 103.417%; 2016 at a redemption price of 101.708% and
thereafter at a redemption price of 100%.
Each
of the following constitutes an event of default under the Indenture: (1)
failure to make the payment of any interest on the Notes when the same becomes
due and payable, and such failure continues for a period of 30 days; (2) failure
to make the payment of any principal of, or premium, if any, on, the Notes when
the same becomes due and payable at its stated maturity, upon acceleration,
redemption, optional redemption, required repurchase or otherwise; (3) failure
to comply with the covenant described under "—Merger, Consolidation and Sale of
Property" in the Indenture; (4) failure to comply with any other covenant or
agreement in the Notes or in the Indenture (other than a failure that is the
subject of the foregoing clause (1), (2) or (3)) and such failure continues for
30 days after written notice is given to Rite Aid; (5) a default under any debt
of Rite Aid or any restricted subsidiary that results in acceleration of the
final maturity of such debt, or failure to pay any such debt at final maturity
(giving effect to applicable grace periods), in an aggregate amount greater than
$35.0 million or its foreign currency equivalent at the time; (6) any judgment
or judgments for the payment of money in an aggregate amount in excess of $35.0
million (or its foreign currency equivalent at the time) that shall be rendered
against Rite Aid or any restricted subsidiary and that shall not be waived,
satisfied or discharged for any period of 30 consecutive days during which a
stay of enforcement shall not be in effect; (7) certain events
involving bankruptcy, insolvency or reorganization of Rite Aid or any
significant subsidiary; (8) any subsidiary guarantee of a significant subsidiary
ceases to be in full force and effect (subject to certain exceptions) and such
default continues for 20 days after notice to Rite Aid, or any subsidiary
guarantor that is a significant subsidiary denies or disaffirms its obligations
under the Notes; and (9) the material impairment of the security interests under
certain of Rite Aid's agreements governing its second priority indebtedness for
any reason other than the satisfaction in full of all obligations under the
Indenture and discharge of such agreements and the Indenture or any security
interest created thereunder shall be declared invalid or unenforceable or Rite
Aid or any of its subsidiaries asserting, in any pleading in any court of
competent jurisdiction, that any such security interest is invalid or
unenforceable. A default under clauses (4), (8) or (9) is not an
event of default until the trustee or the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding notify Rite Aid of the
default and Rite Aid does not cure such default within the time specified after
receipt of such notice. Such notice must specify the default, demand that it be
remedied and state that such notice is a "Notice of Default."
Rite
Aid is not required to make mandatory sinking fund payments with respect to the
Notes.
Upon
a change of control, as defined in the Indenture, Rite Aid is required to offer
to purchase all of the Notes then outstanding at a purchase price equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to,
but not including, the purchase date
5
(subject
to the rights of holders of record on the relevant record date to receive
interest due on the relevant interest payment date).
The
covenants in the Indenture limit the ability of Rite Aid and certain of its
subsidiaries to, among other things: (1) incur additional debt; (2) pay
dividends or make other restricted payments; (3) purchase, redeem or retire
capital stock or subordinated debt; (4) make asset sales; (5) enter into
transactions with affiliates; (6) incur liens; (7) enter into sale leaseback
transactions; (8) provide subsidiary guarantees; (9) make investments; and (10)
merge or consolidate with any other person.
A
copy of the Indenture is filed hereto as Exhibit 4.1 and is incorporated by
reference herein.
The
press release is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item
9.01. Financial Statements and
Exhibits.
(c)
Exhibits.
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Number
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Description
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4.1
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Indenture,
dated as of October 26, 2009, among Rite Aid Corporation, as issuer, the
Subsidiary Guarantors named therein and The Bank of New York Mellon Trust
Company, N.A., as trustee.
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4.2
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Form
of 10.250% Notes due 2019 (included in Exhibit 4.1).
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10.1
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Incremental
Facility Amendment No. 1, dated as of October 26, 2009, among Rite Aid
Corporation, the lenders party thereto, Citicorp North America, Inc., as
administrative agent and collateral agent and the other agents party
thereto.
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|
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10.2
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Incremental
Facility Amendment No. 2, dated as of October 19, 2009 and effective as of
October 26, 2009, among Rite Aid Corporation, the lenders party thereto,
Citicorp North America, Inc., as administrative agent and collateral agent
and the other agents party thereto.
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|
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10.3
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Registration
Rights Agreement relating to the Notes, dated October 26, 2009, among Rite
Aid Corporation, the Subsidiary Guarantors and Citigroup Global Markets
Inc., Wells Fargo Securities, LLC, Banc of America Securities LLC, and
Goldman, Sachs & Co., as the Initial Purchasers of the
Notes.
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99.1
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Press
release, dated October 26, 2009.
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6
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereto
duly authorized.
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Date: October
29, 2009
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By:
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/s/
Marc A. Strassler
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Name:
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Marc
A. Strassler
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||
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Title:
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Executive
Vice President,
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||
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General
Counsel and Secretary
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7
Exhibit
Index
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Number
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Description
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4.1
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Indenture,
dated as of June October 26, 2009, among Rite Aid Corporation, as issuer,
the Subsidiary Guarantors named therein and The Bank of New York Mellon
Trust Company, N.A., as trustee.
|
|
|
4.2
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Form
of 10.250% Notes due 2019 (included in Exhibit 4.1).
|
|
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10.1
|
Incremental
Facility Amendment No. 1, dated as of October 26, 2009, among Rite Aid
Corporation, the lenders party thereto, Citicorp North America, Inc., as
administrative agent and collateral agent and the other agents party
thereto.
|
|
|
10.2
|
Incremental
Facility Amendment No. 2, dated as of October 19, 2009 and effective as of
October 26, 2009, among Rite Aid Corporation, the lenders party thereto,
Citicorp North America, Inc., as administrative agent and collateral agent
and the other agents party thereto.
|
|
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10.3
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Registration
Rights Agreement relating to the Notes, dated October 26, 2009, among Rite
Aid Corporation, the Subsidiary Guarantors and Citigroup Global Markets
Inc., Wells Fargo Securities, LLC, Banc of America Securities LLC, and
Goldman, Sachs & Co., as the Initial Purchasers of the
Notes.
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|
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99.1
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Press
release, dated October 26, 2009.
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8