BJ’s Pays $643M To Green, CVC; Rating Cut

BJ’s Wholesale is paying a $643 million distribution to its sponsors and certain members of management, sister Web site peHub reported.

The dividend comes roughly one year after Leonard Green & Partners and CVC Capital Partners completed their $2.8 billion takeover of BJ’s in September 2011. The firms invested $630 million equity into the takeover, Standard & Poor’s said in an October 2011 report.

BJ’s Wholesale is currently in the market with a $1.625 billion dividend recap deal, Thomson Reuters Loan Pricing Corp. reported The deal includes a $1.225 billion first-lien loan and a $400 million second -lien loan. The new debt will be used to pay for the dividend and refinance existing debt, LPC said.

Moody’s Investors Service downgraded BJ’s corporate family rating to B2 from B1 and the said rating outlook is negative. “The result of this highly aggressive shift in financial policy will be debt/EBITDA pro forma for this proposed dividend of well over 6 times, which is the downgrade trigger that was set for the B1 rating, and interest coverage will reduce to close to 1.3 times,” Charlie O’Shea, a Moody’s senior analyst, said in a Sept. 10 statement.

Westborough, Mass.-based BJ’s, a warehouse retailer with more than 180 stores in 15 states, has annual revenue of around $11 billion, Moody’s said.

Executives at BJ’s could not be reached for comment.

(Luisa Beltran is a senior writer for peHub.)