U.S. drugstore chain Rite Aid Corp. filed for bankruptcy as it seeks to restructure its debt and said it would close more stores.
Rite Aid said in a statement that it had secured $3.45 billion in new financing commitments from certain lenders as part of a court-supervised process, without elaborating. The company also said it had reached a restructuring agreement with its senior secured noteholders and named Jeffrey S. Stein chief executive, citing his expertise in turning around the company.
“The financing is expected to provide sufficient liquidity to support the company throughout the process,” the company said in a statement.
The Philadelphia, Pennsylvania-based chain has been saddled with more than $3 billion in long-term borrowings. The situation worsened after the U.S. government claimed it was illegally dispensing prescriptions for opioid painkillers.
Junk level
S&P Global Ratings further downgraded the retailer to junk status in August, citing the company’s large debt load maturing in 2025 and “potentially significant” claims from opioid litigation.
Other national drugstore chains, including CVS Health Corp. and Walgreens Boots Alliance Inc., have agreed to pay large sums for their role in the opioid epidemic.two chains settle down Late last year, a deal was reached with more than a dozen states, agreeing to pay more than $10 billion.
In its Chapter 11 bankruptcy filing on Oct. 15, Rite Aid listed assets and liabilities between $1 billion and $10 billion. The company estimates it has more than 100,000 creditors and said funds will be available for distribution to unsecured creditors.
Documents show that McKesson is the largest unsecured non-internal creditor, with trade claims payable of approximately $667.6 million.
Rite Aid said it will finalize the reorganization agreement under a court-supervised process. It will be implemented as soon as possible.
Rite Aid’s Elixir Solutions unit to be sold to MedImpact Healthcare Systems Inc.
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