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Executive Summary

REVCO PROPOSING THREE-PART RECAPITALIZATION PLAN to repay its $433.2 mil. debt and decrease interest payments, Revco announced Nov. 9. The refinancing plan includes a rights offering, an underwritten offering of new senior notes and new credit facilities from a consortium of banks. Revco emerged from bankruptcy on June 1 ("The Pink Sheet" May 18, In Brief). The Twinsburg, Ohio-based drug store chain filed registration statements for the equity and debt financings with the Securities and Exchange Commission Nov. 9. One filing describes the sale by Revco of $110 mil. of common stock through a proposed rights offering and standby purchase arrangement. The other details the sale by Revco of $125 mil. of new senior notes due in 1999. Revco will issue the rights to purchase additional shares of common stock to its stockholders on an as yet unannounced date. The subscription price of the rights, to be determined before the registration is declared effective by the SEC, will be in the $7 to $8 range per share of common stock, the filing states. Zell/Chilmark Fund, L.P and Magten Asset Management Corporation, which together own 34% of Revco's common stock, expect to purchase, on a standby basis, all unsubscribed shares when the rights offering expires. The plan also involves Revco borrowings under a $150 mil. secured term loan facility and the execution of a $150 mil. secured revolving credit facility. The co-agents are Banque Paribas, Continental Bank N.A. and GE Capital Corporate Finance Group. Revco filed for Chapter 11 protection in July 1988 with $1.5 bil. in debt. The firm's first reorganization plan was confirmed by a bankruptcy court in March, and a revised plan, which included an additional $3.5 mil. payment to trade creditors, was announced by the company in April ("The Pink Sheet" April 27, T&G-7).

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