Herbalife Announces Proposed Offering of $700 Million Aggregate Principal Amount of Senior Secured Notes

Rhea-AI Summary

Herbalife announces the intention to offer $700 million in senior secured notes due 2029 to repay debt and for general corporate purposes.

Insights

Financial Analyst

Herbalife's announcement of a $700 million senior secured notes offering is a strategic financial move. The company's decision to address its debt structure by repaying existing obligations, including borrowings under its senior secured credit facility and a portion of its high-interest Senior Notes due 2025, indicates a proactive approach to capital management.

By refinancing part of its debt with potentially lower interest rates, Herbalife could reduce its interest expenses, thereby improving net income and cash flows. This could enhance investor confidence, potentially leading to a positive impact on the company's stock price.

However, the issuance of new debt also means an increase in the company's leverage, which could raise concerns about the risk profile, especially if the new notes carry restrictive covenants. Investors should monitor the terms of the new issuance and Herbalife's future debt-to-equity ratio.

Market Research Analyst

The health and wellness industry is competitive and capital-intensive, requiring continuous investment in product development and marketing. Herbalife's move to secure additional capital through the issuance of senior secured notes could be aimed at ensuring the company has the necessary resources to maintain its competitive position.

However, it's important to consider the market conditions under which this offering is taking place. If investor appetite for corporate debt is low due to economic uncertainty or rising interest rates, Herbalife might face higher costs of borrowing than anticipated, which could impact its financial health and the attractiveness of the notes to investors.

Additionally, the use of proceeds for 'general corporate purposes' is quite broad and stakeholders would benefit from greater transparency regarding how these funds will be allocated to drive growth and shareholder value.

Debt Capital Markets Expert

The structure of the notes offering and its timing are key factors in its success. The senior secured status of the notes provides investors with a higher claim on assets in the event of default, which could make the offering more attractive despite the lack of registration under the Securities Act.

Herbalife's reliance on Rule 144A and Regulation S indicates a targeted approach to sophisticated institutional investors and non-U.S. persons, which may expedite the process and minimize regulatory hurdles. However, the exclusion of retail investors could limit the market for these notes.

The company's credit rating, prevailing interest rates and investor sentiment towards the health and wellness sector will all influence the pricing and uptake of the notes. The outcome of this offering will be an important indicator of market confidence in Herbalife's financial strategy and its ability to manage debt obligations.

LOS ANGELES--(BUSINESS WIRE)-- Herbalife Ltd. (NYSE: HLF) (the “Company”), a global health and wellness company, today announced that HLF Financing SaRL, LLC and Herbalife International, Inc., each a wholly owned subsidiary of the Company, intend, subject to market and other conditions, to offer $700 million aggregate principal amount of senior secured notes due 2029 (the “Notes”).

The Company expects to use the net proceeds from the offering to repay indebtedness, including borrowings outstanding under the Company’s senior secured credit facility and a portion of the Company’s 7.875% Senior Notes due 2025, to pay related fees and expenses and the remainder for general corporate purposes.

This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction. Any offer, if at all, will be made only pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been and are not expected to be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

About Herbalife Ltd.

Herbalife (NYSE: HLF) is a premier health and wellness company, community and platform that has been changing people's lives with great nutrition products and a business opportunity for its independent distributors since 1980. The Company offers science-backed products to consumers in more than 90 markets through entrepreneurial distributors who provide one-on-one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle to live their best life.

Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management, including for future operations, capital expenditures, or share repurchases; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief or expectation; and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements may include, among others, the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate” or any other similar words.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include the following:

• the potential impacts of current global economic conditions, including inflation, on us; our Members, customers, and supply chain; and the world economy;
• our ability to attract and retain Members;
• our relationship with, and our ability to influence the actions of, our Members;
• our noncompliance with, or improper action by our employees or Members in violation of, applicable U.S. and foreign laws, rules, and regulations;
• adverse publicity associated with our Company or the direct-selling industry, including our ability to comfort the marketplace and regulators regarding our compliance with applicable laws;
• changing consumer preferences and demands and evolving industry standards, including with respect to climate change, sustainability, and other environmental, social, and governance, or ESG, matters;
• the competitive nature of our business and industry;
• legal and regulatory matters, including regulatory actions concerning, or legal challenges to, our products or network marketing program and product liability claims;
• the Consent Order entered into with the FTC, the effects thereof and any failure to comply therewith;
• risks associated with operating internationally and in China;
• our ability to execute our growth and other strategic initiatives, including implementation of our restructuring initiatives, and increased penetration of our existing markets;
• any material disruption to our business caused by natural disasters, other catastrophic events, acts of war or terrorism, including the war in Ukraine, cybersecurity incidents, pandemics, and/or other acts by third parties;
• our ability to adequately source ingredients, packaging materials, and other raw materials and manufacture and distribute our products;
• our reliance on our information technology infrastructure;
• noncompliance by us or our Members with any privacy laws, rules, or regulations or any security breach involving the misappropriation, loss, or other unauthorized use or disclosure of confidential information;
• contractual limitations on our ability to expand or change our direct-selling business model;
• the sufficiency of our trademarks and other intellectual property;
• product concentration;
• our reliance upon, or the loss or departure of any member of, our senior management team;
• restrictions imposed by covenants in the agreements governing our indebtedness;
• risks related to our convertible notes;
• changes in, and uncertainties relating to, the application of transfer pricing, income tax, customs duties, value added taxes, and other tax laws, treaties, and regulations, or their interpretation;
• our incorporation under the laws of the Cayman Islands; and
• share price volatility related to, among other things, speculative trading and certain traders shorting our common shares.

Additional factors and uncertainties that could cause actual results or outcomes to differ materially from our forward-looking statements are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 14, 2024, including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Consolidated Financial Statements and the related Notes included therein. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

Forward-looking statements made in this release speak only as of the date hereof. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240329456950/en/

Media Contact:

Thien Ho

Vice President, Global Corporate Communications

thienh@herbalife.com



Investor Contact:

Erin Banyas

Vice President, Head of Investor Relations

erinba@herbalife.com

Source: Herbalife Ltd.

FAQ

What is Herbalife planning to offer?

Herbalife intends to offer $700 million aggregate principal amount of senior secured notes due 2029.

What is the purpose of the offering?

The net proceeds from the offering will be used to repay indebtedness, including borrowings outstanding under the Company’s senior secured credit facility and a portion of the Company’s 7.875% Senior Notes due 2025, to pay related fees and expenses, and the remainder for general corporate purposes.

How will the Notes be offered?

The Notes will be offered only pursuant to Rule 144A under the Securities Act of 1933 and outside the United States in reliance on Regulation S under the Securities Act.

Are the Notes expected to be registered under the Securities Act?

The Notes have not been and are not expected to be registered under the Securities Act or the securities laws of any other jurisdiction.