RLPC: BJ's cuts price guidance, shifts funds on $2.1B loan

NEW YORK Tue Nov 12, 2013 10:48am EST

NEW YORK Nov 12 (Reuters) - Warehouse retailer BJ's Wholesale Club cut indicative price guidance on its covenant-light $2.1 billion credit that will refinance existing debt and back a $450 million distribution to shareholders, sources told Thomson Reuters LPC.

The company also shifted $50 million from the second-lien term loan to the first-lien tranche. BJ's now plans a $1.5 billion first-lien term loan, upsized from $1.45 billion. The company downsized the second-lien term loan by the same amount to $600 million from $650 million.

BJ's is benefiting from robust demand for leveraged loans as investors continue to seek floating-rate assets and hunt for yield. Strong leveraged loan demand has led to downward price flexes of more than double the amount of upward price flexes for the first week of November, according to Thomson Reuters LPC data.

The Libor spread on the first-lien term loan decreased to LIB+350. The loan has a 1 percent Libor floor, and is offered to investors at an original issue discount of 99.5. Previously, pricing was guided at LIB+375-400. The Libor floor and issue price are unchanged.

Price guidance on the second-lien term loan was tightened to LIB+750, with a 1 percent Libor floor, and a 99.5 issue price. Initial price guidance was set at LIB+775-800, with a 1 percent Libor floor and a 99 issue price previously.

Call protection on the first-lien term loan is unchanged at 101 soft call for six months. However, the second-lien term loan now has loosened call protection of 102, 101, versus 103, 102, 101 previously.

Corporate issuer ratings are B3(STA)/B-(STA).

Deutsche Bank is lead left, with Citi, Barclays, Jefferies and Morgan Stanley to the right. Deutsche Bank declined to comment. BJ's did not return calls for comment. Recommitments are due today at 5 p.m. ET.

The first-lien term loan will mature September 26, 2019, and the second-lien is set to mature March 31, 2020. This is in line with the maturity dates of the company's existing $1.625 billion credit.

Headquartered in Westborough, MA, BJ's Wholesale Club operates membership warehouse clubs in the Eastern United States.

The company announced its acquisition by private equity firms Leonard Green & Partners and CVC Capital Partners in 2011.

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