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Rite Aid (NYSE:RAD) filed for Chapter 11 bankruptcy protection.
The drugstore chain filed for bankruptcy in New Jersey, according to a statement on Sunday night. In connection with this process, Rite Aid (RAD) has received a commitment for $3.45 billion in new financing from certain of its lenders.
Philadelphia-based Rite Aid listed (RAD) both assets and liabilities in the range of $1 billion to $10 billion in the Chapter 11 petition, according to a Bloomberg report.
The Rite Aid (RAD) bankruptcy comes as the drugstore chain, one of the biggest in the country, has been burdened by billions of dollars of debt. Bloomberg on Thursday reported that Rite Aid (RAD) ‘was in talks with Bank of America Corp. to secure a loan to tide over a potential Chapter 11 bankruptcy process.
The WSJ reported in August that the drug retailer planned to file for Chapter 11 bankruptcy to restructure its over $3 billion in debt, including its opioid-related liabilities. Reorg first reported in July that Rite Aid (RAD) was considering a Chapter 11 filing to address liabilities related to its opioid exposure.
In a separate press release on Sunday, Rite Aid (RAD) announced the appointment of Jeffrey S. Stein as chief executive officer, chief restructuring officer and a member of the company’s board, effective immediately. Stein succeeds Elizabeth Burr, who has served as Interim CEO since January. Burr will continue in her role as a Director on the Company’s Board.
“With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy,” Stein said in the statement.
Rite Aid (RAD) also announced that it entered into an agreement with MedImpact Healthcare, an independent pharmacy benefit solutions company, to which MedImpact will acquire Rite Aid’s Elixir Solutions business. Under the terms of the agreement, MedImpact will serve as the “stalking horse bidder” in a court-supervised sale process under the bankruptcy code.
Elixir Solutions is operating normally and continuing to serve clients, plan sponsors, members and customers as usual.
With Rite Aid’s bankruptcy filing, it joins drugmakers Mallinckrodt (OTC:MNKTQ), Endo (OTC:ENDPQ), and Purdue Pharma, which declared bankruptcy due to opioid litigation.
Rite Aid (RAD) short interest is 33.5%.
