LOS ANGELES - Herbalife Ltd. (NYSE: NYSE:HLF), a global nutrition company, has successfully closed a private offering and refinancing initiative aimed at strengthening its financial position. The company announced the closure of an $800 million senior secured notes offering and the establishment of new credit facilities totaling $800 million.
The transaction involved the issuance of 12.25% senior secured notes due April 2029, which were priced at 97.298% of their face value and are non-callable for two years. Herbalife also entered into a $400 million senior secured Term Loan B facility and a $400 million senior secured revolving credit facility, both due in April 2029, to refinance its 2018 senior secured credit facility.
John DeSimone, Chief Financial Officer of Herbalife, stated that the completion of these financial maneuvers is a step towards reducing the company's Total Leverage Ratio to the targeted 3.0x by the end of 2025.
The proceeds from these transactions will be used to repay outstanding amounts under the 2018 Term Loan A, Term Loan B, and Revolving Credit Facility. Moreover, $300 million of the $600 million aggregate principal amount of its 7.875% Senior Notes due 2025 will be redeemed at a price of 101.969%.
The new Term Loan B bears interest at a rate of the Secured Overnight Financing Rate (SOFR) plus 6.75% and the revolving credit facility's interest rate will fluctuate based on the company's Total Leverage Ratio, with an initial rate set at SOFR plus 6.25%. The company is required to maintain a maximum Total Leverage Ratio of 4.50x through the end of 2024, with gradual reductions scheduled for 2025.
These financial instruments will be guaranteed by Herbalife and certain of its domestic and foreign subsidiaries. The company emphasized that the 2029 Secured Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States without registration or an applicable exemption from registration requirements.
This financial restructuring is based on a press release statement from Herbalife Ltd. and aims to provide the company with a more flexible capital structure to support its operations and strategic initiatives.
InvestingPro Insights
Herbalife Ltd. (NYSE: HLF) has recently made significant moves to restructure its financials, and the market's response is reflected in the company's current valuation metrics. According to InvestingPro data, Herbalife's Market Cap stands at approximately $812.26 million.
The company's P/E Ratio is notably low at 5.6, suggesting that its shares might be undervalued when compared to the earnings it generates. Furthermore, the adjusted P/E Ratio for the last twelve months as of Q4 2023 is even lower at 4.49.
Two InvestingPro Tips highlight Herbalife's financial attractiveness. Firstly, the company's valuation implies a strong free cash flow yield, which could be appealing to investors looking for companies with the potential to generate cash.
Secondly, despite the price decline over the last six months, analysts predict the company will be profitable this year, which may indicate potential for a rebound. These insights suggest that Herbalife's current financial strategies could position the company for future growth.
For investors seeking a deeper analysis, there are more InvestingPro Tips available that delve into Herbalife's financial health and market performance. For instance, the platform offers insights into the company's shareholder yield and earnings multiple, both of which are critical for assessing the stock's potential value.
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