Rite Aid 2016 Annual Report Download - page 53

currently bears interest at a rate per annum equal to LIBOR plus 3.875% with a LIBOR floor of
1.00%, if we choose to make LIBOR borrowings, or at Citibank’s base rate plus 2.875%.
The second priority secured term loan facilities and the indentures that govern our secured and
guaranteed unsecured notes contain restrictions on the amount of additional secured and unsecured
debt that can be incurred by us. As of February 27, 2016, the amount of additional secured debt that
could be incurred under the most restrictive covenant of the second priority secured term loan facilities
and these indentures was approximately $1.8 billion (which amount does not include the ability to enter
into certain sale and leaseback transactions). However, we currently cannot incur any additional
secured debt assuming a fully drawn revolver and the outstanding letters of credit. The ability to issue
additional unsecured debt under these indentures is generally governed by an interest coverage ratio
test. As of February 27, 2016, we had the ability to issue additional unsecured debt under the second
lien credit facilities and other indentures.
Other 2016 Transactions
On April 2, 2015, we issued $1.8 billion aggregate principal amount of our 6.125% Notes to
finance the majority of the cash portion of our acquisition of EnvisionRx, which closed on June 24,
2015. Our obligations under the notes are fully and unconditionally guaranteed, jointly and severally, on
an unsubordinated basis, by all of our subsidiaries that guarantee our obligations under the Amended
and Restated Senior Secured Credit Facility, the Tranche 1 Term Loan, the Tranche 2 Term Loan, the
9.25% senior notes due 2020 (the ‘‘9.25% Notes’’) and the 6.75% senior notes due 2021 (the ‘‘6.75%
Notes’’) (the ‘‘Rite Aid Subsidiary Guarantors’’), including EnvisionRx and certain of its domestic
subsidiaries other than EIC (the ‘‘EnvisionRx Subsidiary Guarantors’’ and, together with the Rite Aid
Subsidiary Guarantors, the ‘‘Subsidiary Guarantors’’). The guarantees are unsecured. The 6.125% Notes
are unsecured, unsubordinated obligations of Rite Aid Corporation and rank equally in right of
payment with all of our other unsecured, unsubordinated indebtedness.
During May 2015, $64.1 million of our 8.5% convertible notes due 2015 were converted into
24.8 million shares of common stock, pursuant to their terms. The remaining $0.1 million of our 8.5%
convertible notes due 2015 were repaid by us upon maturity.
On August 15, 2015, we completed the redemption of all of our outstanding $650.0 million
aggregate principal amount of our 8.00% Notes. In connection with the redemption, we recorded a loss
on debt retirement, including call premium and unamortized debt issue costs of $33.2 million during
the second quarter of fiscal 2016.
2015 Transactions
On October 15, 2014, we completed the redemption of all of the outstanding $270.0 million
aggregate principal amount of 10.25% senior notes due October 2019 at their contractually determined
early redemption price of 105.125% of the principal amount, plus accrued interest. We funded this
redemption with borrowings under our revolving credit facility. We recorded a loss on debt retirement
of $18.5 million related to this transaction.
2014 Transactions
In June 2013, $419.2 million aggregate principal amount of the outstanding 7.5% senior secured
notes due 2017 were tendered and repurchased by us. In July 2013, we redeemed the remaining 7.5%
notes for $85.2 million which included the call premium and interest to the redemption date. The
tender offer for, and redemption of, the 7.5% notes were funded using the proceeds from the
Tranche 2 Term Loan, borrowings under our revolving credit facility and available cash.
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