UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
Senior Secured Notes due 2029
On April 12, 2024, HLF Financing SaRL, LLC (“HLF Financing”) and Herbalife International, Inc. (“HII” and together with HLF Financing, the “Issuers”), each a wholly owned subsidiary of Herbalife Ltd., a Cayman Islands exempted company incorporated with limited liability (the “Company”), issued $800 million aggregate principal amount of 12.250% Senior Secured Notes due 2029 (the “Notes”) to certain initial purchasers (the “Offering”). The Notes were offered and sold in the United States to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States pursuant to Regulation S under the Securities Act. The Notes are governed by an indenture, dated as of April 12, 2024, among the Issuers, the Company and certain subsidiaries of the Company party thereto as guarantors and Citibank, N.A., as trustee and notes collateral agent (the “Indenture”).
The Notes will bear interest at a rate of 12.250% per year payable semi-annually in arrears in cash on April 15 and October 15 of each year, beginning on October 15, 2024. The Notes will mature on April 15, 2029.
The Notes are jointly and severally, unconditionally guaranteed on a senior secured basis by the Company and its existing and future subsidiaries that are guarantors of the obligations of any domestic borrower under the Company’s senior secured credit facility. The Notes and the related guarantees are the Issuers’ and the guarantors’ senior obligations, and are secured on a pari passu first-priority basis by liens on the Collateral (as defined in the Indenture), which is the same collateral that secures the Company’s senior secured credit facility, subject to certain limitations and permitted liens, and are: (i) equal in right of payment with all of the Issuers’ and guarantors’ existing and future senior indebtedness; (ii) equal in priority as to the Collateral owned by the Issuers and guarantors with respect to any obligations of the Issuers and guarantors secured by a first priority lien on the Collateral, including under the Company’s senior secured credit facility; (iii) effectively senior to all existing and future indebtedness of the Issuers and guarantors that is unsecured or secured by junior liens on the Collateral, to the extent of the value of the Collateral owned by the Issuers or such guarantor; (iv) effectively subordinated to all of the Issuers’ and guarantors’ existing and future indebtedness that is secured by liens on assets that do not constitute a part of the Collateral, to the extent of the value of such assets; and (v) senior in right of payment to any of the Issuers’ future indebtedness that is, by its terms, expressly subordinated in right of payment to the Notes.
At any time prior to April 15, 2026, the Issuers may redeem all or part of the Notes at a redemption price equal to 100% of their principal amount, plus a “make whole” premium as of the redemption date, and accrued and unpaid interest (subject to the rights of holders of record on the relevant record date to receive interest due on the relevant interest payment date). In addition, at any time prior to April 15, 2026, the Issuers may redeem up to 40% of the aggregate principal amount of the Notes with the proceeds of one or more equity offerings, at a redemption price equal to 112.250%, plus accrued and unpaid interest. Furthermore, at any time on or after April 15, 2026, the Issuers may redeem all or part of the Notes at the following redemption prices, expressed as percentages of principal amount, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve-month period beginning on April 15, of the years indicated below:
| Year | Percentage | |||
| 2026 |
106.125 | % | ||
| 2027 |
103.063 | % | ||
| 2028 and thereafter |
100.000 | % | ||
The Indenture contains customary negative covenants, including, among other things, limitations or prohibitions on restricted payments, incurrence of additional indebtedness, liens, mergers, asset sales and transactions with affiliates. In addition, the Indenture contains customary events of default.
The foregoing summary of the Indenture is not complete and is qualified in its entirety by reference to the complete text of the Indenture, which includes the form of the Note, a copy of which is filed as Exhibit 4.1 hereto and is incorporated herein by reference.
Senior Secured Credit Facility
On April 12, 2024, the Company, HLF Financing, HII, Herbalife International Luxembourg S.à R.L., HBL IHB Operations S.à r.l., certain subsidiaries of the Company party thereto as guarantors, the lenders party thereto, each issuing bank, Jefferies Finance LLC, as administrative agent for the lenders under the term loan B facility (the “Term B Facility”) and as collateral agent, and Coöperatieve Rabobank U.A., New York Branch (“Rabobank”), as administrative agent for the lenders under the revolving credit facility (the “Revolving Credit Facility”, and together with the Term B Facility, the “Credit Facilities”), entered into an eighth amendment (the “Amendment”) to the Credit Agreement dated as of August 16, 2018 (as so amended, the “Credit Agreement”).
The Amendment, among other things, refinanced and replaced in full the Company’s existing credit facilities with (i) the Term B Facility, with an aggregate principal amount of $400 million, and (ii) the Revolving Credit Facility, with an aggregate principal amount of $400 million (the refinancings effected pursuant to the Credit Agreement, together with the Offering, the “Refinancings”).
The Term B Facility bears interest at either Adjusted Term SOFR plus a margin of 6.75%, or base rate plus a margin of 5.75%. The Term B Facility matures on April 12, 2029, subject to a springing maturity 91 days ahead of certain other indebtedness of the Company unless certain conditions are met.
Borrowings under the Revolving Credit Facility will bear interest, depending on the Company’s total leverage ratio, at either Adjusted Term SOFR plus a margin of between 5.50% and 6.50%, or base rate plus a margin of between 4.50% and 5.50%. The Company will pay a commitment fee on the undrawn portion of the Revolving Facility of, depending on the Company’s total leverage ratio, between 0.35% to 0.45% per annum. The Revolving Credit Facility matures on April 12, 2028, subject to a springing maturity 182 days ahead of certain other indebtedness of the Company unless certain conditions are met.
The Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations or prohibitions on declaring and paying dividends and other distributions, redeeming and repurchasing certain other indebtedness, loans and investments, additional indebtedness, liens, mergers, asset sales and transactions with affiliates. In addition, the Credit Agreement contains customary events of default. The Revolving Credit Facility requires the Company to comply with certain financial covenants, including (i) a maximum total leverage ratio of 4.50:1.00 through December 31, 2024, stepping down to 4.25:1.00 on March 31, 2025 and 4.00:1.00 at September 30, 2025 and thereafter, (ii) a maximum first lien net leverage ratio of 2.50:1.00, (iii) a minimum fixed charge coverage ratio of 2.00:1.00, and (iv) a minimum liquidity coverage of $200 million of revolver availability and accessible cash.
The Credit Facilities are jointly and severally, unconditionally guaranteed on a senior secured basis by the Company and certain of its existing and future subsidiaries.
The foregoing summary of the Amendment is not complete and is qualified in its entirety by reference to the complete text of the Amendment a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under “Item 1.01. Entry into a Material Definitive Agreement” is incorporated herein by reference.
| Item 2.04 | Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
On April 4, 2024, the Company and HLF Financing, Inc. issued a conditional notice of redemption to redeem $300 million aggregate principal amount of its outstanding 7.875% Senior Notes due 2025 (the “2025 Notes”), subject to satisfaction or waiver by the Company of the condition that certain subsidiaries of the Company completed an
offering of at least $700 million aggregate principal amount of senior secured debt securities. The closing of the Offering on April 12, 2024 satisfied the condition precedent set forth in the notice of redemption such that the redemption is expected to occur on April 19, 2024. The 2025 Notes were issued under an Indenture, dated as of August 16, 2018, among the Company, HLF Financing, Inc., U.S. Bank Trust Company, National Association (as successor to MUFG Union Bank, N.A.), as Trustee (as defined therein) and the guarantors party thereto (the “2025 Notes Indenture”). The redemption price for the 2025 Notes is equal to 101.969% of the principal amount plus accrued and unpaid interest to, but not including the Redemption Date estimated to be an aggregate of approximately $3.2 million.
| Item 8.01. | Other Events. |
On April 12, 2024, the Company issued a press release announcing the closing of the Refinancings.
A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Herbalife Ltd. | ||||||
| April 18, 2024 | By: | /s/ Henry Wang | ||||
| Name: | Henry Wang | |||||
| Title: | Executive Vice President, General Counsel and Corporate Secretary | |||||