Leonard Green, CVC nearly double their investment in BJ’s Wholesale

Westborough, Mass.-based BJ’s has launched a $2.1 billion dividend recap loan, according to Thomson Reuters Loan Pricing Corp. BJ’s is using the proceeds to pay out a $450 million dividend to investors and to refinance debt, LPC said.

The payout comes after BJ’s in September 2012 issued a $643 million distribution to its sponsors and certain members of management.

The payouts means Leonard Green and CVC have nearly doubled their money. The sponsors acquired BJ’s in September 2011 in a deal valued at $2.8 billion. Leonard Green and CVC invested $630 million of equity as part of the transaction, peHUB has reported.

BJ’s will have returned almost $1.1 billion to its investors in a little over a year, Moody’s Investors Service confirmed in an Oct. 30 statement. At the same time, the retailer’s debt has jumped to $2.5 billion from $1.8 billion, said Moody’s, as it downgraded BJ’s corporate family and probability of default rating to ‘B3’ from ‘B2.’

“The downgrade recognizes the deterioration in the company’s credit metrics that will result from BJ’s paying an approximately $450 million debt-financed dividend to its sponsors and certain members of management, as well as the increasingly-aggressive financial policy tone that this dividend sets,” said Charlie O’Shea, a Moody’s VP, in the statement.

Officials for BJ’s, CVC and Leonard Green did not return calls or messages for comment.

Luisa Beltran is a senior reporter for peHUB