Rite Aid 2011 Annual Report Download - page 88

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 26, 2011, February 27, 2010 and February 28, 2009
(In thousands, except per share amounts)
10. Indebtedness and Credit Agreement (Continued)
Company received notice that it had regained compliance with the NYSE’s minimum share price listing
requirement. The Company is currently in compliance with all NYSE listing rules.
2010 Transactions
In October 2009, the Company issued $270,000 of 10.25% senior secured notes due October 15,
2019. These notes are unsecured, unsubordinated obligations of Rite Aid Corporation and rank equally
in right of payment with all other unsubordinated indebtedness. The Company’s obligations under these
notes are guaranteed, subject to certain limitations, by the same subsidiaries that guarantee the
obligations under the senior secured credit facility and the 9.75% senior secured notes due 2016. The
guarantees are secured by shared second priority liens with holders of the 10.375% senior secured
notes due 2016 and 7.5% senior secured notes due 2017. The indenture that governs the 10.25% notes
contains covenant provisions that, among other things, include limitations on the Company’s ability to
pay dividends, make investments or other restricted payments, incur debt, grant liens, sell assets and
enter into sale-leaseback transactions. The 10.25% senior secured notes due October 2019 were issued
at 99.2% of par.
In June 2009, the Company issued $410,000 of 9.75% senior secured notes due June 12, 2016.
These notes are unsecured, unsubordinated obligations of Rite Aid Corporation and rank equally in
right of payment with all other unsubordinated indebtedness. The Company’s obligations under these
notes are guaranteed, subject to certain limitations, by the same subsidiaries that guarantee the
obligations under the senior secured credit facility and its 8.00% senior secured notes due 2020. These
guarantees are shared, on a senior basis, with debt outstanding under the senior secured credit facility
and its 8.00% senior secured notes due 2020. The indenture that governs the 9.75% notes and its
8.00% senior secured notes due 2020 contains covenant provisions that, among other things, allow the
holders of the notes to participate along with the holders of the 8.00% senior secured notes due 2020
in the mandatory prepayments resulting from the proceeds of certain asset dispositions (at the option
of the noteholder) and include limitations on the Company’s ability to pay dividends, make investments
or other restricted payments, incur debt, grant liens, sell assets and enter into sale-leaseback
transactions. The 9.75% senior secured notes due June 2016 were issued at 98.2% of par.
2009 Transactions
In July 2008, pursuant to a tender offer and consent solicitation, the Company repurchased
substantially all of the outstanding amounts of its 8.125% senior secured notes due May 2010, its 7.5%
senior secured notes due January 2015 and its 9.25% senior notes due June 2013. This transaction was
done because these notes had restrictions on the incurrence of liens securing the secured debt that
prohibited the Company from fully drawing on its revolving credit facility under certain circumstances.
The remaining outstanding amounts of such series no longer contain such restrictions and are no
longer secured or guaranteed. The Company recorded a loss on debt modification related to these
transactions of $36,558 in fiscal 2009.
These transactions were financed via the issuance of a senior secured term loan (the Tranche 3
Term Loan described above) and the issuance of a $470,000 aggregate principal amount of 10.375%
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