Rite Aid receives interim approval for $3.45B in Chapter 11 financing
Rite Aid Corp. can move forward with its Chapter 11 bankruptcy filing.
The drugstore retailer, which initiated a voluntary court-supervised Chapter 11 bankruptcy process in the U.S. Bankruptcy Court for the District of New Jersey on Sunday, Oct. 15, 2023, has received approvals from the court for its related “First Day” motions.
The court granted interim approval for Rite Aid to have access to up to $3.45 billion in debtor-in-possession financing from some of its lenders. This financing is expected to provide sufficient liquidity to support the company throughout its Chapter 11 bankruptcy process, including paying associate wages, salaries and benefits without interruption and paying vendors and suppliers in full for goods and services provided on or after the filing date.
Rite Aid also plans to sell 78 Rite Aid and Bartell Drugs pharmacy leases and 21 fee-owned properties, pending court approval. Previous media reports indicated the retailer may shutter 400 to 500 stores. A&G Realty Partners is assisting the company with its store closing and lease restructuring program.
The company. which received warning of potential delisting from the New York Stock Exchange on Oct. 5, 2023, listed estimated assets and liabilities in the range of $1 billion to $10 billion in its court filing. Rite Aid is also facing more than 1,000 federal, as well as a number of state-level, lawsuits over allegations that the chain contributed to the country’s opioid crisis by oversupplying painkillers such as OxyContin.
“We are pleased to have received Court approval of these critical First Day motions, which will enable Rite Aid to continue serving our customers and meeting their pharmacy needs throughout this process,” said Jeffrey S. Stein, CEO and chief restructuring officer of Rite Aid. “With the support of certain of our lenders and the majority of our bondholders, we look forward to moving through this process and emerging as a stronger company, well-positioned for long-term success.”
In addition, as previously announced, Rite Aid has also entered into an agreement with MedImpact Healthcare System Inc. an independent pharmacy benefit solutions company, to acquire Rite Aids’ Elixir Solutions business. Under the terms of the agreement, MedImpact will serve as the “stalking horse bidder” in a court-supervised sale process. The proposed transaction is subject to higher and better offers, court approval and other customary conditions.
Elixir Solutions is operating normally and continuing to serve clients, plan sponsors, members and customers as usual. Elixir Insurance is not included in Rite Aid’s Chapter 11 process or the proposed transaction with MedImpact, and it is continuing to operate and serve members as usual.
Kirkland & Ellis LLP is serving as legal advisor, Guggenheim Securities is serving as investment banker and Alvarez & Marsal is serving as transformation officer and financial advisor to the company.