BJ's outlines structure, price talk on $2.2 billion credit facility

By Sara Rosenberg

New York, Sept. 12 - BJ's Wholesale Club Inc. released structure and price talk on its $2.225 billion senior secured credit facility as the deal launched on Monday afternoon, according to market sources.

The facility consists of an $850 million five-year ABL revolver, a $50 million last-out ABL term loan, a $1.125 billion seven-year first-lien term loan and a $200 million 71/2-year second-lien term loan, sources said.

When the timing for the bank meeting was announced, the deal was to include a $900 million ABL facility and about $1.3 billion in first- and second-lien term loans, but the specific breakdown was not available.

In addition, the company originally planned on getting a $1.25 billion first-lien term loan and a $425 million second-lien term loan, but the amount of term loan borrowings was reduced as a result of sale and leaseback that is expected to come at closing.

Price talk on the ABL revolver is Libor plus 200 basis points, subject to a grid, while the ABL term loan is talked at Libor plus 350 bps, sources remarked.

The first-lien term loan is talked in the Libor plus 525 bps area with a 1.25% Libor floor and an original issue discount of 971/2, and has 101 soft call protections for one year.

The second-lien term loan is talked at Libor plus 850 bps to 875 bps with a 1.25% Libor floor and an original issue discount of 97, and has call protection of 103 in year one, 102 on year two and 101 in year three, sources added.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Barclays Capital Inc., Jefferies & Co., GE Capital Markets and Wells Fargo Securities LLC are the lead banks on the deal.

Leonard Green & Partners LP and CVC Capital Partners will use proceeds from the new credit facility, along with around $640 million of equity, to fund the buyout of the company for $51.25 per share in cash. The all-cash transaction is valued at $2.8 billion.

Closing is expected on or about Sept. 30, subject to approval of BJ's shareholders, which was already obtained on Friday, customary conditions and regulatory approvals.

BJ's Wholesale Club is a Westborough, Mass.-based operator of warehouse clubs.

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