Bausch Pays Out $772M Dividend to Sponsors Including Warburg Pincus

Warburg Pincus may be having problems selling Bausch & Lomb, but that hasn’t stopped the global PE firm from getting some of its investment back.

Rochester, N.Y.-based Bausch, a provider of eye care products, paid out a $772 million dividend to its equity sponsors, according to a March 22 SEC filing. That looks to be about 40% of the sponsor’s equity investment. The $772 million dividend is the first paid out by Bausch, which is now looking to go public, peHUB has learned.

Warburg acquired Bausch & Lomb in 2007 for about $4.5 billion, including $830 million in debt. Warburg, along with Bank of America, Citi, Credit Suisse and J.P. Morgan Ventures, provided about $1.9 billion equity for the deal, according to an August 2007 SEC filing. Warburg, at the time, owned 100% of voting equity interests in Bausch, while other investors had non-voting stakes, the filing says.

Warburg’s investment in Bausch came from its ninth PE fund, which raised $8 billion in 2005. The PE firm’s 10th pool, Warburg Pincus Private Equity X LP, collected $15 billion in 2007, Warburg’s web site says. Warburg is seeking to raise $12 billion for its latest fund, Reuters has reported.

Warburg currently owns about 87% of Bausch, a March 22 SEC filing says. Welsh, Carson, Anderson & Stowe has about 11%.

The dividend comes after Warburg failed to sell Bausch. Earlier in the year, the PE firm was seeking bids of $10 billion for the eye care company but potential buyers balked at the high price. Bausch, which is still up for sale, last week filed a registration statement with the SEC for an IPO that could raise as much as $100 million.

Standard & Poor’s Ratings Services on Monday revised its rating of Bausch to positive from stable. S&P affirmed the company’s ‘B+’ corporate credit rating. Moody’s Investors Service, meanwhile, says the $772 million dividend is credit negative but doesn’t change Bausch’s corporate family rating of ‘B2.’

Bausch declined comment.

Photo courtesy of Shutterstock

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2 Comments

  • Someone just mentioned that it’s daring of Warburg to pile more debt onto Bausch and then attempt to take it public. What do people think?

  • It is not that “daring” – the lift in equity markets and continued robust credit markets allow it, so why not? It is common to do a “pre-cap” deal in which owners lever up pre-exit to take a sponsor dividend, especially if (a) the company has performed well since the LBO and (b) it is “underlevered” compared to peers, or (c) both.

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