Following a good reception in the institutional arena, Rite Aid Corp.'s four-year, $1.9 billion credit is making the retail rounds. Citibank, J.P. Morgan Chase, Credit Suisse First Boston and Fleet Retail Finance lead the deal, which has already received more than $1 billion from the agent round and institutional lenders. A banker eyeing the credit said that the deal is doing well considering it has what he considers to be high leverage and a somewhat shaky story. Commitment fees are fairly tight, considering the bank debt traded at discounted levels, he added. "The leads could get the institutional guys to step up for the term piece, though," he noted. Rite Aid officials did not return calls.
In the agent round, retail-based lenders have committed $650 million and institutional players $350 million. Heller Financial, Bank of America Business Credit, GMAC, GE Capital, CIT Group and Foothill Capital are the asset-based lenders comprising the agents. Commitments of $50 million get 62.5 basis points, $35 million receive 37.5 basis points and $20 million 25 basis points. Pricing for the $500 million revolver and $1.4 billion term loan is LIBOR plus 31/2 %. Standard & Poor's assigned a BB- rating to the pending facility, two notches higher than the corporate rating, citing collateral coverage of 1.7x.