UPDATE 1-RLPC: BJ's to launch $2.1 bln refinancing loan
By Natalie Wright
NEW YORK Oct 29 (Reuters) - Warehouse retailer BJ's Wholesale Club is launching a $2.1 billion refinancing credit Thursday, sources told Thomson Reuters LPC. Deutsche Bank is lead left, with Citi, Barclays, Jefferies and Morgan Stanley to the right.
The new credit is comprised of a $1.45 billion, six-year first-lien term loan and a $650 million, 6.5-year second-lien term loan. It will launch at a bank meeting at 11:30 a.m. Thursday in New York City. Proceeds will refinance existing debt and provided a distribution to shareholders.
The maturities of the first- and second-lien term loans are in line with the company's existing credit facility. The first-lien term loan will mature September 26, 2019, and the second-lien is set to mature March 31, 2020.
The new term loans are expected to be covenant-lite. Expected corporate family ratings on the company are B3/B-. Refinancing is at the front of loan investors' minds. BJ's refinancing announcement comes the same day as iron ore company Fortescue Metals Group stated plans to enter a $4.95 billion credit to cut pricing and extend the maturity on its existing term loan.
"People are talking about another repricing wave," said one institutional loan investor, noting that loan markets are strong, with several credits tightening and upsizing in syndication during the past week.
With loans that priced in the first quarter facing the roll-off of six-month call protection, sources said that the next wave of companies seeking to cut pricing is on deck.
Recent new money deals from Saks Inc, Neiman Marcus, Dell and Hilton have already funneled through the pipeline, and one of the last hold-outs on the new money calendar, a $4.1 billion acquisition loan from Tribune Company, is set to launch October 31. Sources said that with year-end approaching, the window for large deals is closing.
"Big (multi-billion dollar) deals just don't come in December or late November, because underwriters don't want to take the risk of a choppy market or unfocused audience," said another loan investor.
The market, in addition to possible refinancing and repricing deals such as the BJ's deal set to launch this week, is also focused on smaller M&A/LBO deals poised to hit debt markets.
BJ's last hit institutional loan markets in February. At that time, the company repriced its $1.3 billion term loan B at a spread of LIB+325, with a 1 percent Libor floor, at par. That facility priced with 101 soft call protection for six months.
Headquartered in Westborough, MA, BJ's Wholesale Club is an operator of membership warehouse clubs in the Eastern United States. The company operates 200 Clubs in 15 states from Maine to Florida.
The company announced its acquisition by private equity firms Leonard Green & Partners and CVC Capital Partners in 2011.
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