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):
November 15, 2006 (November 8, 2006)
Rite Aid Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-5742 23-1614034
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) 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)
[x] 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 November 8, 2006, Rite Aid Corporation ("Rite Aid") entered into an
amendment (the "Credit Agreement Amendment") to the credit agreement (the
"Credit Agreement") governing its existing senior secured revolving credit
facility to permit the closing of its previously announced acquisition of The
Jean Coutu Group (PJC) USA, Inc., a wholly owned subsidiary of The Jean Coutu
Group (PJC), Inc. ("Jean Coutu Group") and the holding company for the Brooks
and Eckerd drugstore chains (the "acquisition"). The closing of the acquisition
is subject to certain conditions, including without limitation stockholder
approval and completion of the review by the Federal Trade Commission. Pursuant
to the Credit Agreement Amendment, Rite Aid also established a new senior
secured term loan facility in an aggregate principal amount of $145 million
(the "Tranche 1 Term Facility," and the term loans thereunder, "Tranche 1 Term
Loans") and borrowed the full amount of $145 million thereunder. Rite Aid used
the proceeds of the Tranche 1 Term Loans (i) to repay amounts outstanding under
the Credit Agreement, which had been used to repay approximately $142 million
aggregate principal amount of its 12.5% Senior Secured Notes due September 2006
plus accrued interest and (ii) for general corporate purposes.
Also pursuant to the Credit Agreement Amendment, the lenders to the
Credit Agreement agreed to establish, in connection with the acquisition, an
additional senior secured term loan facility in an aggregate principal amount
of $1.105 billion (the "Tranche 2 Term Facility," and the term loans
thereunder, "Tranche 2 Term Loans"). On the closing date of the acquisition,
Rite Aid expects to draw approximately $680 million of the Tranche 2 Term Loan
Facility and use the proceeds to pay a portion of the consideration for the
acquisition and for other acquisition related costs. Rite Aid expects to draw
the remaining approximately $425 million available under the Tranche 2 Term
Loan Facility on or after the date that Rite Aid files its first post-closing
consolidated balance sheet with the SEC (the "Post-Closing Filing Date"),
subject to the satisfaction of certain conditions, and use the proceeds of the
subsequent draw (i) to repay amounts then outstanding under its existing senior
secured revolving credit facility, which Rite Aid expects to use to repay (a)
approximately $250 million aggregate principal amount of its 4.75% Convertible
Notes due December 2006 and (b) approximately $184 million aggregate principal
amount of its 7.125% Senior Notes due January 2007, and (ii) for general
corporate purposes. Borrowings under the Tranche 2 Term Loan Facility are
subject to a number of conditions, including without limitation the following
conditions: (i) the acquisition shall have been consummated or shall be
consummated simultaneously with the closings under the facility, (ii) the
closings of certain of the financing arrangements in connection with the
acquisition shall, prior to or simultaneously with the funding under the
Tranche 2 Term Loan Facility, be funded or issued, and (iii) Rite Aid's 4.75%
Convertible Notes due December 2006 and its 7.125% Senior Notes due January
2007 shall have been repaid in full.
Certain of the lenders, syndication agent, administrative agent and
collateral processing agent to the existing senior secured revolving credit
facility and their affiliates have performed investment banking, commercial
banking and advisory services for Rite Aid from time to time for which they
have received customary fees and expenses. A copy of the Credit Agreement
Amendment is filed as Exhibit 10.1 hereto and is incorporated herein by
reference.
In addition, as previously disclosed, Rite Aid maintains a receivables
financing agreement (the "Receivables Financing Agreement") with several
multi-seller asset-backed commercial paper vehicles. Under the terms of the
Receivables Financing Agreement, Rite Aid sells substantially all of its
eligible third party pharmaceutical receivables to a bankruptcy remote special
purpose entity and retains servicing responsibility. On November 9, 2006, Rite
Aid entered into an amendment to the Receivables Financing Agreement (the
"Receivables Financing Agreement Amendment"). Pursuant to the Receivables
Financing Agreement Amendment, Rite Aid obtained the consent of the parties to
the Receivables Financing Agreement to permit the closing of the acquisition. A
copy of the Receivables Financing Agreement Amendment is filed as Exhibit 10.2
hereto 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 Rite Aid's entrance into the Credit
Agreement Amendment set forth in Item 1.01 above is incorporated herein by
reference.
At Rite Aid's option, the Tranche 1 Term Loans bear interest at a rate
per annum equal to either (i) an "Adjusted LIBO Rate" plus between 1.25% and
1.75% (based on availability under Rite Aid's existing senior secured revolving
credit facility) or (ii) the "Alternate Base Rate" (which is the higher of (a)
Citicorp's prime rate and (b) the Federal Funds Effective Rate plus 0.5%) plus
between 0.25% and 0.75% (based on availability under Rite Aid's existing senior
secured revolving credit facility). The Tranche 1 Term Loans are guaranteed by
all of Rite Aid's subsidiaries that guarantee the Credit Agreement and, on or
after the Post-Closing Filing Date, will also be guaranteed by all wholly-owned
domestic subsidiaries that Rite Aid acquires pursuant to the acquisition, in
each case other than subsidiaries of Rite Aid engaged solely in the pharmacy
benefits management business and certain other subsidiaries of Rite Aid. The
Tranche 1 Term Loans and the guarantees thereof are secured by a first priority
security interest in Rite Aid's and the subsidiary guarantors' cash, cash
equivalents, deposit accounts, securities accounts, accounts receivable,
instruments, chattel paper, investment property, intellectual property, cash
management accounts, documents in respect of inventory in transit, inventory
and script lists (collectively, the "Collateral"). Rite Aid must make mandatory
prepayments of the Tranche 1 Term Loans and, after their incurrence, loans
under the Tranche 2 Term Loan Facility (on a pro rata basis in accordance with
principal amounts outstanding thereunder) if at any time there is a shortfall
in Rite Aid's borrowing base (which is based on Rite Aid's accounts receivable,
script lists and inventory) and no loans or uncollateralized letters of credit
are outstanding under the existing senior secured revolving credit facility.
The Tranche 1 Term Loans will mature on September 30, 2010.
The Tranche 2 Term Loans will mature on the seventh anniversary of the
closing date of the acquisition and will bear interest at a rate per annum
equal to, at Rite Aid's option, either (i) an "Adjusted LIBO Rate" plus an
interest rate spread to be determined based on market conditions or (ii) the
"Alternate Base Rate" plus an interest rate spread to be determined based on
market conditions. The Tranche 2 Term Loans will be guaranteed by all of Rite
Aid's subsidiaries that guarantee the other obligations under the Credit
Agreement, including certain of Rite Aid's domestic subsidiaries that are
acquired from Jean Coutu Group. The Tranche 2 Term Loans and the guarantees by
the foregoing subsidiaries will initially be secured by a first priority lien
on all the equity interests in the domestic subsidiaries of Rite Aid acquired
from Jean Coutu Group. On or after the Post-Closing Filing Date, the liens on
the equity interests will be released and the Tranche 2 Term Loans will be
secured by a first priority interest in the Collateral. Rite Aid must make
mandatory prepayments of the Tranche 2 Term Loans with the proceeds of the
asset dispositions by Rite Aid and its subsidiaries (subject to certain
limitations and reinvestment rights), with a portion of any excess cash flow
generated by Rite Aid and its subsidiaries and with a portion of the proceeds
of certain issuances of equity by Rite Aid and its subsidiaries and with a
portion of the proceeds of certain issuances of debt by Rite Aid and its
subsidiaries (subject to certain exceptions). If at any time there is a
shortfall in Rite Aid's borrowing base (which is based on Rite Aid's accounts
receivables, script lists and inventory), and no loans or uncollateralized
letters of credit are outstanding under the existing senior secured revolving
credit facility, Rite Aid must prepay the Tranche 1 Term Loans and the Tranche
2 Term Loans (on a pro rata basis in accordance with principal amounts
outstanding thereunder) to eliminate such shortfall.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Number Description
------ -----------
10.1 - Amendment and Restatement Agreement, dated as of November 8,
2006, relating to the Credit Agreement dated as of June 27,
2001, as amended and restated as of September 30, 2005, among
Rite Aid Corporation, the lenders from time to time party
thereto, Citicorp North America, Inc., as administrative agent
and collateral processing agent and Bank of America, N.A., as
syndication agent.
10.2 - Amendment No. 4 to Receivables Financing Agreement and Consent,
dated as of November 9, 2006, by and among Rite Aid Funding II,
CAFCO, LLC, Jupiter Securitization Corporation, Variable Funding
Capital Company LLC, Citibank, N.A., JPMorgan Chase Bank, N.A.,
as investor agent, Wachovia Bank, National Association, as
investor agent, Citicorp North America, Inc., as investor agent
and program agent, Rite Aid Hdqtrs. Funding, Inc., as collection
agent, and certain other parties thereto as originators.
Additional Information and Where to Find It
In connection with the proposed acquisition, a preliminary proxy
statement of Rite Aid and other materials have been filed with the SEC and are
publicly available. The definitive proxy statement will be mailed to the
stockholders of Rite Aid. STOCKHOLDERS OF RITE AID ARE ADVISED TO READ THE
DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Such proxy statement and other relevant documents may
also be obtained, free of charge, on the Securities and Exchange Commission's
website (http://www.sec.gov) or by contacting our Secretary, Rite Aid
Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania 17011.
Participants in the Solicitation
Rite Aid and certain persons may be deemed to be participants in the
solicitation of proxies relating to the proposed acquisition. The participants
in such solicitation may include Rite Aid's executive officers and directors.
Further information regarding persons who may be deemed participants will be
available in Rite Aid's proxy statement to be filed with the Securities and
Exchange Commission in connection with the acquisition.
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.
Date: November 15, 2006 By: /s/ Robert B. Sari
----------------------------
Name: Robert B. Sari
Title: Executive Vice President,
General Counsel and Secretary
EXHIBIT INDEX
Number Description
------ -----------
10.1 - Amendment and Restatement Agreement, dated as of November 8,
2006, relating to the Credit Agreement dated as of June 27,
2001, as amended and restated as of September 30, 2005, among
Rite Aid Corporation, the lenders from time to time party
thereto, Citicorp North America, Inc., as administrative agent
and collateral processing agent and Bank of America, N.A., as
syndication agent.
10.2 - Amendment No. 4 to Receivables Financing Agreement and Consent,
dated as of November 9, 2006, by and among Rite Aid Funding II,
CAFCO, LLC, Jupiter Securitization Corporation, Variable Funding
Capital Company LLC, Citibank, N.A., JPMorgan Chase Bank, N.A.,
as investor agent, Wachovia Bank, National Association, as
investor agent, Citicorp North America, Inc., as investor agent
and program agent, Rite Aid Hdqtrs. Funding, Inc., as collection
agent, and certain other parties thereto as originators.