Tuesday, August 17, 2010

Rite-Aid Postpones Judgment Day (Again)

Rite-Aid (NYSE:RAD) has a new plan to postpone its ultimate day of reckoning just a wee bit longer—more junk bonds! See Rite Aid Announces Offering of Senior Secured Notes and Proposed Refinancing of Its Revolving Credit Facility

The new junk bond offering will further reduce the risk that Rite-Aid will vanish in a puff of smoke. McKesson (NYSE:MCK), which sells about $13 billion in drugs to Rite-Aid, will also be relieved.

Wow, this company has more lives than a cat with an afterlife.

Of course, restructuring an excessive debt burden is not the same as saying the future looks rosy. Recent same-store sales trends don’t dispel Rite-Aid’s nickname as “the turnaround that never turns around.” The NYSE is once again threatening to delist Rite-Aid if its stock stays below the price of a Sausage McMuffin.

FWIW, below is a quick primer on their debt load and the new offering.

This snapshot of Rite-Aid’s debt load was presented by the company in an April 2010 presentation.

The new offering will push the $650 million dark blue bar from 2015 to 2020 and the $1,175 dotted red bar from 2012 to 2014 or 2015. Hence, crisis postponed.

See What's Next for Rite-Aid for my still-relevant thoughts on their next steps.


  1. “the turnaround that never turns around.”