Herbalife Initiates Process to Refinance 2018 Term Loan B

Rhea-AI Summary

Herbalife initiates refinancing process for its 2018 Term Loan B, targeting $1.2 billion of secured financing and a $400 million revolving credit facility. The company repaid 2024 Convertible Notes in full on March 15, 2024.

Insights

Financial Analyst

The initiation of a refinancing process for Herbalife's Term Loan B is a strategic financial move that may influence the company's debt profile and liquidity. Refinancing could potentially lower interest expenses and extend the maturity of the debt, which would improve cash flow management. For investors, this could mean a more stable financial outlook for Herbalife, as the company may secure more favorable borrowing terms. However, the success of this initiative depends on market conditions and investor appetite for Herbalife's debt instruments.

From a credit risk perspective, the repayment of the 2024 Convertible Notes is a significant step towards reducing near-term liabilities and demonstrates prudent financial management. It's essential to monitor the terms of the new secured financing and revolving credit facility, as they will determine the future cost of capital for Herbalife and could impact the company's financial flexibility. The use of cash and credit facilities to repay the Convertible Notes suggests a strategic balance between liquidity preservation and leverage reduction.

Market Research Analyst

Herbalife's refinancing activity must be viewed within the broader context of the health and wellness industry, where companies often require substantial capital for growth and operations. The decision to refinance could reflect an industry trend where businesses are looking to capitalize on current market conditions to optimize their capital structure. Investors should consider how Herbalife's refinancing compares with its peers in terms of timing, interest rates and loan terms.

Additionally, the company's focus on securing $1.2 billion of financing and a $400 million revolving credit facility indicates a proactive approach to capital management. This level of refinancing could signal confidence in Herbalife's future revenue streams and its ability to service debt. However, it is also important to assess the potential risks associated with increased debt levels, such as decreased financial flexibility and higher interest obligations in the event of a market downturn.

Debt Market Analyst

Herbalife's move to refinance its existing debt obligations is a critical maneuver in the debt markets that may influence investor sentiment. The outcome of this refinancing will impact the company's credit spreads and could be a bellwether for the health and wellness sector's creditworthiness. The refinancing process typically requires a company to re-evaluate its risk profile and present a compelling case to lenders and investors.

The repayment of the 2024 Convertible Notes with a mix of cash and credit facility borrowings showcases Herbalife's ability to manage its capital structure dynamically. The terms of the new financing will be closely scrutinized for indications of the company's credit standing and the appetite of debt investors for Herbalife's credit risk. The successful completion of the refinancing could enhance the company's reputation in the capital markets and potentially lower its cost of debt.

LOS ANGELES--(BUSINESS WIRE)-- Herbalife Ltd. (NYSE: HLF), a premier health and wellness company, community and platform, today announced the initiation of a refinancing process for its 2018 Term Loan B, which matures in August 2025. As of December 31, 2023, $650.6 million was outstanding under the Term Loan B. The previously announced refinancing of the Company’s 2018 Term Loan A and 2018 Revolving Credit Facility is ongoing.

Overall, the Company is targeting $1.2 billion of secured financing and a $400 million revolving credit facility to repay the Term Loan A, Term Loan B and revolving credit facility, as well as a portion of the 2025 Senior Notes.

On March 15, 2024, and consistent with its capital allocation priorities, the Company repaid in full the outstanding principal and accrued interest on the 2024 Convertible Notes with a combination of $108.6 million in cash and $91.0 million in borrowings under its revolving credit facility.

The terms of the proposed refinancing transactions will be disclosed upon completion of the transactions. The proposed refinancings will be subject to customary closing conditions and there can be no assurance that any of the refinancings will occur successfully, or at all.

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.

For more information, visit https://ir.herbalife.com.

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 Transformation Program 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/20240321093365/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 (HLF) announcing regarding its 2018 Term Loan B?

Herbalife is initiating a refinancing process for its 2018 Term Loan B, which matures in August 2025.

How much was outstanding under the Term Loan B as of December 31, 2023?

$650.6 million was outstanding under the Term Loan B as of December 31, 2023.

What is the total amount the company is targeting for secured financing?

The company is targeting $1.2 billion of secured financing and a $400 million revolving credit facility.

How did Herbalife repay the outstanding principal and accrued interest on the 2024 Convertible Notes?

On March 15, 2024, the company repaid in full the outstanding principal and accrued interest on the 2024 Convertible Notes with a combination of $108.6 million in cash and $91.0 million in borrowings under its revolving credit facility.

What will be disclosed upon completion of the proposed refinancing transactions?

The terms of the proposed refinancing transactions will be disclosed upon completion of the transactions.

Are there any assurances that the refinancings will occur successfully?

The proposed refinancings will be subject to customary closing conditions, and there can be no assurance that any of the refinancings will occur successfully, or at all.