Rite Aid 2013 Annual Report Download - page 14

• 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 senior secured 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 1.00 to 1.00. As of March 2, 2013, we had availability under our revolving
credit facility of approximately $1,015.0 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.
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 continue to 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 subject to
limitations on sale and may only be sold 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. For example, from time to time the Jean Coutu Group has announced the sale of shares
of our common stock pursuant to Rule 144 under the Securities Act. On April 17, 2013, the Jean
Coutu Group announced that it had sold 72,500,000 of its 178,401,162 shares of our common stock
pursuant to Rule 144. We have entered into a registration rights agreement with Jean Coutu Group,
which will give Jean Coutu Group the right to require us to register all or a portion of its shares at any
time (subject to certain exceptions). The sale of a substantial number of our shares by Jean Coutu
Group or our other stockholders within a short period of time could cause our stock price to decrease,
make it more difficult for us to raise funds through future offerings of Rite Aid common stock or
acquire other businesses using Rite Aid common stock as consideration.
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