Rite Aid 2014 Annual Report Download - page 108

RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 1, 2014, March 2, 2013 and March 3, 2012
(In thousands, except per share amounts)
19. Related Party Transactions (Continued)
On September 26, 2013, the Company agreed to exchange eight shares of 7% Series G Convertible
Preferred Stock (the ‘‘Series G preferred stock’’) and 1,876,013 shares of 6% Series H Convertible
Preferred Stock (the ‘‘Series H preferred stock’’, collectively the ‘‘Preferred Stock’’) of the Company
(the ‘‘Exchange’’), held by Green Equity Investors III, L.P. (‘‘LGP’’) for 40,000,000 shares of the
Company’s common stock, par value $1.00 per share, with a market value of $190,400 at the $4.76 per
share closing price on the Settlement Date (as hereinafter defined), pursuant to an individually
negotiated exchange transaction. The Exchange settled on September 30, 2013 (the ‘‘Settlement Date’’).
The Preferred Stock, including additional shares representing earned but unpaid dividends as of the
Settlement Date, was redeemable by the Company for cash at 105% of the Preferred Stock’s $100 per
share liquidation preference or $199,937. The Company agreed to the Exchange as it was prohibited
under several of its debt instruments from using cash to effect the redemption of the Preferred Stock.
Following the Settlement Date, no shares of the Series G preferred stock or Series H preferred stock
remained outstanding and the Company’s restated certificate of incorporation was amended to
eliminate all references to the Series G preferred stock and Series H preferred stock. In accordance
with the terms of the Exchange, John M. Baumer, a member of the board of directors of the Company
and a limited partner of Leonard Green & Partners, L.P., an affiliate of the LGP, resigned from the
Company’s board of directors.
The Series G preferred stock had a liquidation preference of $100 per share and paid quarterly
dividends in additional shares at 7% of liquidation preference and could be redeemed at the
Company’s election. The Series H preferred stock paid quarterly dividends in additional shares at 6%
of liquidation preference and could be redeemed at the Company’s election. The Series G preferred
stock and Series H preferred stock were convertible into common stock of the Company, at the
holder’s option, at a conversion rate of $5.50 per share.
As of the Settlement Date, LGP held 1,904,161 shares of Series G preferred stock and Series H
preferred stock, which included 28,140 shares of earned and unpaid dividends. The Series G preferred
stock and Series H preferred stock would have converted into 34,621,117 shares of common stock at
the contracted conversion rate of $5.50 per share. Accordingly, income attributable to common
stockholders was reduced by $25,603, or $0.03 per diluted share, the value of the additional 5,378,883
shares of common stock issued upon conversion at the $4.76 per share closing price on the Settlement
Date.
The Company had a financial advisory services agreement with Leonard Green & Partners, L.P. to
pay a monthly fee of $12.5 plus out-of-pocket expenses which was terminated in fiscal 2012. The
Company paid fees of $38 for financial advisory services and expense reimbursements of $67 in fiscal
2012.
20. Subsequent Events
On April 1, 2014, the Company acquired Boston based Health Dialog Services Corporation, which
is engaged in providing health coaching, shared decision making and healthcare analytics from Bupa, a
London based international healthcare services group. Health Dialog will operate as a 100 percent
owned subsidiary of the Company.
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