US pharmacy chain Rite Aid Corp. filed for bankruptcy as it looks to restructure debts, and said it will shutter more stores.
As part of a court-supervised process, Rite Aid received a commitment for $3.45 billion in new financing from certain lenders, it said in a statement, without elaborating. It also said it clinched a restructuring deal with holders of its senior secured notes and also appointed Jeffrey S. Stein as chief executive officer, citing his expertise in turning around companies.
“This financing is expected to provide sufficient liquidity to support the company throughout this process,” it said in a statement.
The Philadelphia, Pennsylvania-based chain has been laboring under more than $3 billion of long-term borrowings. The situation worsened after the US government claim it filled unlawful prescriptions for opioid painkillers.
Junk-Rated
S&P Global Ratings cut the retailer further into junk in August, citing a large debt load maturing from 2025 and “potentially significant” claims from opioid lawsuits.
Other national pharmacy chains, including CVS Health Corp. and Walgreens Boots Alliance Inc., have already agreed to pay big sums for their involvement in the opioid epidemic. The two chains settled late last year with more than a dozen states, agreeing to pay more than $10 billion.
In its Oct. 15 Chapter 11 bankruptcy petition, Rite Aid listed both assets and liabilities in the range of $1 billion to $10 billion. The company estimated it had more than 100,000 creditors and said funds would be available for distribution to unsecured creditors.
McKesson Corp. is the largest unsecured, non-insider creditor, with trade-payable claims of about $667.6 million, according to the documents.
Rite Aid said it would finalize the restructuring agreement under the court-supervised process. It would implement it as soon as possible.
Rite Aid’s Elixir Solutions unit will be sold to MedImpact Healthcare Systems Inc.