Drug retailer Rite Aid files for bankruptcy, gets $3.45 bln commitment

Rite Aid Corp which filed for Chapter 11 bankruptcy on Sunday, said it has received a commitment for $3.45 billion in new financing and named a new CEO, as litigations alleged that the drugstore chain helped fuel the opioid crisis in the US.

The bankruptcy process will allow Rite Aid to resolve litigation claims in an “equitable manner”, the company said.

Rite Aid has appointed Jeffrey Stein as its new CEO and chief restructuring officer, replacing interim CEO Elizabeth Burr.

Stein has been appointed to the company’s board and Burr will also remain on the board, it said.

Rite Aid will close more of its underperforming stores and will transfer employees at impacted stores to other locations where possible, the company said, without providing further details.

The company operates more than 2,000 retail stores across 17 states in the US, although it is much smaller than its rivals such as Walgreens Boots Alliance and CVS Health.

Rite Aid has also reached an in-principle agreement with some of its senior secured noteholders that would significantly reduce its debt.

The company entered into an agreement with MedImpact Healthcare Systems, where the independent pharmacy benefit solutions firm will acquire the company’s Elixir Solutions business.

MedImpact will serve as the ‘stalking horse bidder’ in a court-supervised sale process, Rite Aid said.

Rite Aid listed estimated assets and liabilities in the range of $1 billion to $10 billion in a court filing with the US Bankruptcy Court for the District of New Jersey.

Apart from the opioid lawsuit liabilities, the pharmacy chain has been struggling with total debts of $8.6 billion as of June 3, according to the legal filing, some of which is due to be repaid in 2025.

Rite Aid also listed total assets of $7.65 billion in the court filing.