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Rite Aid to issue new bonds in move to add $300 million in liquidity

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CAMP HILL, Pa. Rite Aid last week announced plans to issue new debt in an effort to refinance $710 million in existing bonds, a move that should lift any pressure from near-term liquidity concerns and allow the company to focus more readily on long-term earnings objectives, Meredith Adler, Lehman Bros. analyst, noted in a research note released Thursday.

The new debt, though at a higher cost, allows Rite Aid to add approximately $300 million in additional liquidity, Adler wrote.

“We believe the reduced risk exposure to equity holders more than offsets the added cost,” she added. “Today’s [monthly] sales results also reinforce our confidence in the outlook for the business and we expect coming data points to support the stock.”

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