Rite Aid initiates process under Chapter 11, receives $3.45B in new financnig

Rite Aid announced it has reached an agreement in principle with certain of its senior secured noteholders on the terms of a financial restructuring plan that will allow the company to accelerate its ongoing business transformation. Implementing the contemplated restructuring plan will significantly reduce the company’s debt, increase its financial flexibility and enable it to execute on key initiatives. In connection with this, Rite Aid has initiated a voluntary court-supervised process under Chapter 11 of the U.S. Bankruptcy Code. Rite Aid is continuing to deliver healthcare products and services across its retail and online platforms for the nearly one million customers it serves daily. The court-supervised process provides an orderly and efficient forum for Rite Aid to: finalize and build consensus for the agreement in principle the company has reached with certain of its senior secured noteholders; accelerate the company’s store footprint optimization plan; implement a proposed transaction under which MedImpact would acquire Elixir Solutions, subject to the outcome of a court-approved marketing process; access additional liquidity and resolve litigation claims in an equitable manner. In connection with this process, Rite Aid has received a commitment for $3.45B in new financing from certain of its lenders. This financing is expected to provide sufficient liquidity to support the Company throughout this process. The company has reached an agreement in principle with certain of its senior secured noteholders on the terms of a financial restructuring that would significantly reduce the Company’s debt. Rite Aid intends to use the court-supervised process to finalize the agreement in principle, build additional consensus for the financial restructuring plan it contemplates and implement it as quickly and efficiently as possible. Rite Aid regularly evaluates its store portfolio. In connection with the court-supervised process, the company will continue assessing its footprint and close additional underperforming stores. These efforts will further reduce the company’s rent expense and are expected to strengthen its overall financial performance. The Company will also transfer associates at impacted stores to other Rite Aid locations where possible. Rite Aid has entered into an agreement with MedImpact, pursuant to which MedImpact will acquire Rite Aid’s Elixir Solutions business. Under the terms of the agreement, MedImpact will serve as the “stalking horse bidder” in a court-supervised sale process under section 363 of the U.S. Bankruptcy Code. Accordingly, the proposed transaction is subject to higher and better offers, court approval and other customary conditions. Elixir Solutions is operating normally and continuing to serve clients, plan sponsors, members and customers as usual. Elixir Insurance is not included in Rite Aid’s Chapter 11 process or the proposed transaction with MedImpact, and it is continuing to operate and serve members as usual. Rite Aid and certain of its subsidiaries, including those that comprise Elixir Solutions, have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey. Elixir Insurance is not included in the Chapter 11 process. The Company has filed a number of customary motions with the Court seeking authorization to support its operations, including the payment of employee wages, salaries and benefits without interruption. The Company expects to receive court approval for these requests shortly. The company intends to pay vendors and suppliers in full for goods and services provided on or after the filing date.