BJ’s Wholesale to Pay Big Dividend to Sponsors, Including Green, CVC & Management

Today in huge dividend news is word that BJ’s Wholesale is paying a $643 million distribution to its sponsors and certain members of management.

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 PE firms invested $630 million equity into the takeover, Standard & Poor’s says 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. says. 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 says.

Moody’s Investors Service downgraded BJ’s corporate family rating to B2 from B1 and the 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,” says Charlie O’Shea, a Moody’s senior analyst, in a Sept. 10 statement.

Westborough, Mass.-based BJ’s, a leading warehouse retailer, has annual revenue of around $11 billion, Moody’s says.

Officials for BJ’s couldn’t be reached for comment.

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