In response, shares of the company sank more than 5% to $1.64 in morning trading.
Rite Aid had previously announced its desire to refinance some of its debt, due in September 2010. The refinancing also includes a $525 million term loan due June 2015 and $1 billion senior secured revolving credit agreement due September 2012. Rite Aid has currently secured $900 million in commitments.
The loan's proceeds will help refinance a $145 million term loan due September 2010 and will also help to repay and cancel part of the outstanding commitments on Rite Aid's $1.75 billion senior secured revolving credit facility. What's left will go towards other fees and expenses.
If the refinancing is a success it would leave flailing Rite Aid debt-free until 2012, as long as it nabs the $1 billion credit line. The drugstore's current debt, which is close to $6 billion, is mostly attributable to the acquisition of the Brooks and Eckerd chains in 2007.
While most retailers are facing similar struggles as Rite Aid, the company's decision to expand by more than 50% and add more than 1,800 stores to its portfolio, resulted in greater debt. The company posted a loss of $2.3 billion in the fourth quarter.
Rite Aid plans to close up to 117 stores over the next year in an effort to course correct.
The company had 4,901 stores in 31 states at the end of February, and the moves will leave it with about 2,000 stores less than rivals
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.