Rite Aid Spikes on New Debt Offering

Rite Aid is gaining after it says it is offering a new debt and credit facility.
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NEW YORK (

TheStreet

) --

Rite Aid

(RAD) - Get Report

is surging after the drugstore said it plans a new debt offering and credit facility.

The company plans to sell $650 million in senior notes due in 2020. The proceeds and available cash will be used to pay back a $648 million term loan due in 2015. The company is also working to amend or replace its current $1.18 billion credit facility, which is due in 2012, with a new one due in 2015.

Rite Aid said it has obtained commitments for $1.12 billion.

The announcement comes after Rite Aid received a warning from the New York Stock Exchange last week that it is no longer in compliance with the Big Board. The drugstore has six months, or until its next annual stockholders meeting in June, 2011, if stockholder approval is required to cure the price deficiency (such as approving a stock split), to regain compliance or risk being delisted from the NYSE.

The NYSE requires an average closing price of a stock to be at least $1 a share over a consecutive 30-day trading period.

Shares of Rite Aid are gaining 8.4% to $1.04 in afternoon trading.

-- Reported by Jeanine Poggi in New York.

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