Rite Aid 2016 Annual Report Download - page 54

On July 2, 2013, we issued $810.0 million of our 6.75% senior notes due 2021. 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 our senior secured credit facility,
our second priority secured term loan facilities and our outstanding 8.00% senior secured notes due
2020, 10.25% senior secured notes due 2019 and 9.25% senior notes due 2020. We used the net
proceeds of the 6.75% notes, borrowings under our revolving credit facility and available cash to
repurchase and repay all of our outstanding $810.0 million aggregate principal of 9.5% senior notes due
2017.
In July 2013, $739.6 million aggregate principal amount of the outstanding 9.5% notes were
tendered and repurchased by us. In August 2013, we redeemed the remaining 9.5% notes for
$73.4 million, which included call premium and interest to the redemption date.
In connection with these refinancing transactions, we recorded a loss on debt retirement, including
tender and call premium and interest, unamortized debt issue costs and unamortized discount of
$62.2 million during the second quarter of fiscal 2014.
On September 26, 2013, we 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 our common
stock, par value $1.00 per share with a market value of $190.4 million 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 us for cash at 105% of the Preferred Stock’s $100 per share liquidation preference
or $199.9 million. We agreed to the Exchange as we were prohibited under several of our 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 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 then terms of the Exchange, John
M. Baumer, a member of our board of directors and a limited partner of Leonard Green &
Partners, L.P., an affiliate of the LGP, resigned from our 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 our election.
The Series H preferred stock paid quarterly dividends in additional shares at 6% of liquidation
preference and could be redeemed at our election. The Series G preferred stock and Series H
preferred stock were convertible into common stock, 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 $25.6 million, 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.
As of March 2, 2013, Rite Aid Lease Management Company, a 100 percent owned subsidiary, had
213,000 shares of its Cumulative Preferred Stock, Class A, par value $100 per share (‘‘RALMCO
Cumulative Preferred Stock’’), outstanding. The carrying amount of the RALMCO Cumulative
Preferred Stock as of November 29, 2013 was $20.8 million and was recorded in Other Noncurrent
Liabilities. On November 29, 2013, we repurchased all of the outstanding RALMCO Cumulative
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