Fitch Rates Rite Aid's New 8.5% $150MM Convertible Notes 'CCC'.
Fitch rates Rite Aid as follows:
--Issuer Default Rating (IDR) 'B-';
--$1.75 billion bank credit facility 'BB-/RR1';
--$1.25 billion term loans 'BB-/RR1';
--$1.061 billion 2nd lien senior secured notes 'BB-/RR1';
--$1.851 billion guaranteed senior unsecured notes 'CCC+/RR5';
--$758 million non guaranteed senior unsecured notes 'CCC/RR6'.
The Rating Outlook is Stable.
The ratings consider the risk associated with integrating over 1,800 Brooks and Eckerd stores with Rite Aid's existing store base and improving operations at these stores; the company's high leverage, with total adjusted debt/EBITDAR of 8.1 times (x) for the fiscal year ended March 1, 2008; operating statistics that trail those of competitors; and the intense competition in the drug retailing sector. The ratings also reflect Rite Aid's management's concerted efforts to improve the productivity of its store base, the positive demographics of the drug retailing industry, as well as the benefits from leveraging a larger store base.