About $450 million in institutional tickets rolled in for Rite Aid Corp.'s $1.15 billion "B" piece after last Wednesday's bank meeting. Citigroup and J.P. Morgan lead the company's $2 billion refinancing package. A banker familiar with the deal said about $200 million was committed by buysiders ahead of the meeting and then another $250 million was committed afterwards by the "B" investors. About $1 billion has been committed by pro rata players who will take portions of the "B" loan and the $850 million revolver, the banker added. Both tranches are priced at LIBOR plus 33/4%. An official at Citi and a J.P. Morgan spokesman declined to comment.
The BB/B1 rated credit is secured by a first lien on the company's accounts receivables, inventory, prescription files and other assets. Moody's Investors Service noted that the strength of collateral coverage should provide secured bank lenders with full recovery in a distressed scenario. Proceeds from the deal will go toward repaying the company's existing $1.37 billion facility and its $107 million synthetic lease due March 2005 and to replace the company's existing $500 million revolver. The Camp Hill, Pa.-based drug store company also priced a $360 million note offering due 2010 at 81/8%. The proceeds from this transaction will go to pay down a portion of the existing term loan and for general corporate purposes. Christopher Hall, executive v.p. and cfo, was out of the office last week and a spokeswoman declined comment.