Rite Aid Completes $1.9 Billion Refinancing Of Its September 2010 Debt Maturities; Company Has Ample Liquidity to Execute Business Plan
Rite Aid successfully completed the refinancing of a majority of its September 2010 debt maturities, replacing them with new facilities that mature in 2015 and 2016 and a new $1 billion revolving credit facility that matures in September 2012.
As a result of the refinancing, the only significant debt coming due before the maturity of the new revolver are borrowings under the company’s accounts receivable securitization programs which come due in September 2010. Rite Aid says it now has increased flexibility to refinance these programs, which it expects to do later in 2009 or at the beginning of 2010.
Helping Rite Aid secure the new financing was the improvement the company has made in its operations over the last three quarters, including an increase in liquidity to $901.8 million at the end of the first quarter on May 30, 2009.
“We are in a much stronger financial position today with the significant improvement in cash flow and liquidity we achieved in the first quarter and the completion of the refinancing,” said Mary Sammons, Rite Aid chairman and CEO. “The increase in liquidity gives us ample funds to execute our business plan and the extended maturities give us more time for our initiatives to continue to improve our performance.”
Sammons said she was pleased with the company’s results in the first quarter, which continued to build on the improvements made in the second half of the last fiscal year.
Adjusted EBITDA increased and improved as a percent of sales over last year and net loss narrowed compared to the prior first quarter. Initiatives to grow pharmacy sales including enhanced compliance programs, the Automated Courtesy Refill service, the company’s Living More senior loyalty program and the free Rite Aid RX Savings card contributed to an increase in pharmacy same store sales of 1.6%. The company’s industry-leading generic dispense rate reached 69.9 percent as Rite Aid pharmacists continued to save patients and payors money.
Selling, general and administrative costs as a percent of sales were significantly lower than the first quarter last year and the substantial reduction in inventory continued—while keeping the shelves stocked and the customer shopping experience intact. Customer satisfaction ratings improved year over year.
An increase in cash flow from operations enabled the company to pay back more than $300 million of debt on its revolving credit facility in the quarter—the first time the company was able to reduce its debt significantly since the Brooks Eckerd acquisition. Rite Aid says it expects to generate $325 million of free cash flow this fiscal year, $100 million more than the original projection. The company said its priority continues to be reducing debt.