Rite Aid 2012 Annual Report Download - page 13

The covenants in the instruments that govern our current indebtedness may limit our operating and financial
flexibility.
The covenants in the instruments that govern our current indebtedness limit our ability to:
• incur debt and liens;
• pay dividends;
• make redemptions and repurchases of capital stock;
• make loans and investments;
• prepay, redeem or repurchase debt;
• engage in acquisitions, consolidations, asset dispositions, sale-leaseback transactions and affiliate
transactions;
• change our business;
• amend some of our debt and other material agreements;
• issue and sell capital stock of subsidiaries;
• restrict distributions from subsidiaries; and
• grant negative pledges to other creditors.
The senior secured credit facility contains covenants which place restrictions on the incurrence of
debt beyond the restrictions described above, the payment of dividends, sale of assets, mergers and
acquisitions and the granting of liens. Our credit facility has a financial covenant which requires us to
maintain a minimum fixed charge coverage ratio. The covenant requires that, if availability on the
revolving credit facility is less than $150.0 million, we maintain a minimum fixed charge coverage ratio
of 1.05 to 1.00. As of March 3, 2012, we had availability under our revolving credit facility of
approximately $910.8 million and were in compliance with the senior secured credit facility’s financial
covenant.
Our stockholders will experience dilution if we issue additional common stock.
Subject to any required approval under the stockholder agreement (the ‘‘Stockholder Agreement’’)
that we entered into at the time of the Brooks Eckerd acquisition, we are generally not restricted from
issuing additional shares of our common shares or preferred stock, including, subject to the terms of
our outstanding debt instruments, any securities that are convertible into or exchangeable for, or that
represent the right to receive, common shares or preferred stock or any substantially similar securities,
whether for cash, as part of incentive compensation or in refinancing transactions. Any additional
future issuances of common stock will reduce the percentage of our common stock owned by investors
who do not participate in such issuances. In most circumstances, stockholders will not be entitled to
vote on whether or not we issue additional shares of common stock. The market price of our common
stock could decline as a result of issuances of a large number of shares of our common stock or the
perception that such issuances could occur.
Subject to certain limitations, Jean Coutu Group may sell Rite Aid common stock at any time, which could
cause our stock price to decrease.
The shares of Rite Aid common stock that the Jean Coutu Group currently holds are generally
restricted, but Jean Coutu Group may sell these shares under certain circumstances, including pursuant
to a registered underwritten public offering under the Securities Act or in accordance with Rule 144
under the Securities Act. On April 20, 2012, the Jean Coutu Group announced that it had disposed of
13