Herbalife talks $700 million secured notes with 11¾% coupon at a discount to yield 12½%

By Paul A. Harris

Portland, Ore., April 4 – Herbalife International Inc. and HLF Financing Sarl LLC hiked pricing on a $700 million offering of five-year senior secured notes (Ba2/B+) on Thursday, according to market sources.

The deal is talked with an 11¾% coupon at a discount to yield 12½%.

Early guidance was in the 11% area, traders said.

Books were scheduled to close midafternoon on Thursday, with pricing and allocations expected prior to the close.

However, it was ultimately pushed to Friday, according to a trader who spoke well after Thursday’s close.

Prior to the release of official price talk, at midmorning Thursday, the deal was heard to be playing to $1 billion of demand, sources said.

The notes come with two years of call protection and feature an equity clawback of up to 40% and a 101 poison put.

Citigroup Global Markets Inc. is lead left bookrunner for the Rule 144A and Regulation S for life offering.

Rabobank, BofA Securities Inc., Citizens Capital Markets Inc. and Mizuho Securities USA Inc. are also bookrunners.

The notes as well as the concurrent $500 million senior secured term loan underwent covenant changes which primarily bear upon how the company may disburse cash and incur additional debt.

Proceeds from the notes and loan, along with a $400 million senior secured revolving credit facility, will be used to refinance the company’s senior notes due 2025.

Herbalife is a Los Angeles-based nutrition and weight management company.

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