Rite Aid reportedly close to deal on post-bankruptcy financing
Rite Aid is reportedly close to reaching a deal on a post-bankruptcy financing package, with a group of lenders preparing to provide interim financing while the company remains in Chapter 11, attorneys said Friday, per a Reuters report.
Rite Aid received court approval in late March to begin voting on a bankruptcy plan that would eliminate $2 billion in debt and hand over the company's equity to a group of lenders including investment funds Brigade Capital and HG Vora. But Rite Aid has struggled to finalize some of the deal's details, delaying its planned exit from bankruptcy by over a month, the report noted.
Rite Aid is now close to a final deal with its lenders and expects to seek court approval of its bankruptcy restructuring in late June, Rite Aid attorney Aparna Yenamandra said at a Friday hearing in bankruptcy court in Trenton, N.J.
The report said that Yenamandra acknowledged creditors' frustration with the delay, but she said that the exit financing was an "existential issue" that needed to be resolved before anything else."The objections are irrelevant if I can't deliver a reorganization," Yenamandra told U.S. Bankruptcy Judge Michael Kaplan, the report said.
Rite Aid filed for bankruptcy in October, seeking to address its high debt, close underperforming retail locations, and resolve lawsuits by state and local governments alleging it helped fuel the deadly U.S. opioid abuse epidemic.
The lender group that would take ownership of Rite Aid post-bankruptcy plans to invest additional funds while it remains in Chapter 11, while continuing to negotiate details about the company's exit financing package, Yenamandra said.
"Some of the open issues include financing fees, compensation for Rite Aid's chief executive officer, and how the exit financing will be divided among lenders. Rite Aid has proposed paying $47.5 million to its lowest-ranking creditors, but it has not yet determined how much of that amount would go toward settling the opioid lawsuits," the report said.
The case is Rite Aid Corporation, U.S. Bankruptcy Court for the District of New Jersey, No. 23-18993.