BJ's Credit Rating Downgraded
Moody's Investors Service downgraded its credit rating for BJ's Wholesale Club Inc. this week, in light of the company's plan to raise nearly $690 million in new debt to pay a $643 million dividend to its new owners.
BJs was publicly traded until Leonard Green & Partners LP purchased the Westborough-based retailer in September 2011. According to Moody's, the company's rating was pushed further into junk status, from a B1 to a B2.
"The downgrade to B2 reflects the increase in leverage that will result from BJ's paying the dividend to its sponsors and certain members of management, which represents a little more than the total equity invested in the company in September 2011," said Charlie O'Shea, senior analyst for Moody's.
Kelly McFalls, public relations manager for BJs, declined comment Friday morning.
The rating outlook is negative, according to Moody's, which said the company may see a further downgrade if it takes on more debt.
Despite the downgrade, O'Shea said BJ's is a strong competitor with leading market share, and has had an "excellent operating performance trend" over the past several years.
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