Herbalife Announces Pricing of $550 Million Aggregate Principal Amount of Convertible Senior Note Offering
March 21 2018 - 7:02AM
Business Wire
Herbalife Ltd. (NYSE: HLF) (the “Company”) today announced the
pricing of its offering of $550 million aggregate principal amount
of convertible senior notes due 2024 (the “Convertible Notes”) in a
private offering to qualified institutional buyers, pursuant to
Rule 144A under the Securities Act of 1933, as amended (the
“Securities Act”). The Convertible Notes will pay interest
semiannually at a rate of 2.625% per annum and upon conversion will
be settled, at the Company’s election, in cash, the Company’s
common shares, or a combination thereof, based on the applicable
conversion rate at such time.
The Convertible Notes have an initial conversion rate of 8.0028
common shares per $1,000 principal amount of the Convertible Notes
(which is equal to an initial conversion price of approximately
$124.96 per common share), representing an initial conversion
premium of approximately 30% above the last reported sale price of
$96.12 per common share on March 20, 2018. The Convertible Notes
will mature on March 15, 2024, unless redeemed, repurchased or
converted in accordance with their terms prior to such date. Prior
to December 15, 2023, the Convertible Notes will be convertible
only upon the occurrence of certain events and during certain
periods, and thereafter, at any time until the second scheduled
trading day immediately preceding the maturity date. The Company
expects to close the sale of the Convertible Notes on or about
March 23, 2018, subject to the satisfaction of various customary
closing conditions.
The Company estimates that the net proceeds from the sale of the
Convertible Notes will be approximately $537 million, after
deducting the initial purchasers’ discounts and commissions and the
estimated offering expenses payable by the Company. The Company
expects to use the net proceeds from the offering to repurchase a
portion of the Company’s existing 2.00% convertible senior notes
due 2019 (the “Existing Convertible Notes”) from a limited number
of holders in privately negotiated transactions.
The Company expects that, in connection with the intended
repurchase of a portion of the Existing Convertible Notes, those
holders of the Existing Convertible Notes that sell their Existing
Convertible Notes to the Company may enter into or unwind various
derivatives with respect to the Company’s common shares and/or
purchase or sell the Company’s common shares in the market to hedge
their exposure in connection with these transactions. In
particular, the Company expects that many holders of the Existing
Convertible Notes employ a convertible arbitrage strategy with
respect to the Existing Convertible Notes and have a short position
with respect to the Company’s common shares that they would close
or reduce, through purchases of the Company’s common shares and/or
the entry into various derivatives with respect to the Company’s
common shares, in connection with the Company’s repurchase of their
Existing Convertible Notes, including over a valuation period to be
agreed separately with each such holder of Existing Convertible
Notes that the Company expects to commence on the trading day
immediately following the pricing of the Convertible Notes. This
activity could result in an increase (or reduce the size of any
decrease) in the market price of the Company’s common shares at
that time.
In connection with the Company’s intended repurchase of Existing
Convertible Notes, the Company expects to enter into agreements
with the option counterparties to the capped call transactions
entered into by the Company in connection with the Existing
Convertible Notes, at one or more times concurrently with or
following the pricing of the Convertible Notes, to terminate a
portion of such existing capped call transactions, in each case, in
a notional amount corresponding to the amount of such Existing
Convertible Notes repurchased. In connection with any termination
of existing capped call transactions and the related unwinding of
the existing hedge position of the existing option counterparties
with respect to such transactions, such existing option
counterparties and/or their respective affiliates may sell the
Company’s common shares in secondary market transactions, and/or
enter into or unwind various derivative transactions with respect
to the Company’s common shares, including over one or more
valuation periods to be agreed separately with each such existing
option counterparty at least one of which the Company expects to
commence on the trading day immediately following the pricing of
the Convertible Notes. This activity could result in a decrease (or
reduce the size of any increase) in the market price of the
Company’s common shares at that time. In connection with these
transactions, the Company expects to separately receive payments
and/or deliveries of the Company’s common shares in connection with
the partial unwind of such existing capped call transactions in
amounts that depend on the market price of the Company’s common
shares at such times as agreed with the existing option
counterparties.
This press release is neither an offer to sell nor a
solicitation of an offer to buy the Convertible Notes or the common
shares issuable upon conversion of the Convertible Notes, nor shall
there be any sale of these securities 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.
The Convertible Notes and any common shares issuable upon
conversion of the Convertible 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 is a global nutrition company that sells
weight-management, targeted nutrition, energy and sports and
fitness and outer nutrition care products exclusively to and
through dedicated Herbalife Independent Members in more than 90
countries. The Company has over 8,000 employees worldwide, and its
shares are traded on the New York Stock Exchange (NYSE:
HLF) with net sales of approximately $4.4 billion in 2017. The
Company supports the Herbalife Family Foundation (HFF)
and its Casa Herbalife programs to help bring good
nutrition to children in need.
FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements" within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although we believe that the
expectations reflected in any of our forward-looking statements are
reasonable, actual results 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, such as those disclosed or
incorporated by reference in our filings with the Securities
and Exchange Commission. Important factors that could cause our
actual results, performance and achievements, or industry results
to differ materially from estimates or projections contained in our
forward-looking statements include, among others, the
following:
- our relationship with, and our ability
to influence the actions of, our Members;
- improper action by our employees or
Members in violation of applicable law;
- adverse publicity associated with our
products or network marketing organization, including our ability
to comfort the marketplace and regulators regarding our compliance
with applicable laws;
- changing consumer preferences and
demands;
- the competitive nature of our
business;
- regulatory matters governing our
products, including potential governmental or regulatory actions
concerning the safety or efficacy of our products and network
marketing program, including the direct selling markets in which we
operate;
- legal challenges to our network
marketing program;
- the consent order entered into with
the FTC, the effects thereof and any failure to comply
therewith;
- risks associated with operating
internationally and the effect of economic factors, including
foreign exchange, inflation, disruptions or conflicts with our
third party importers, pricing and currency devaluation risks,
especially in countries such as Venezuela;
- uncertainties relating to
interpretation and enforcement of legislation
in China governing direct selling and
anti-pyramiding;
- our inability to obtain the necessary
licenses to expand our direct selling business in China;
- adverse changes in the Chinese
economy;
- our dependence on increased penetration
of existing markets;
- any material disruption to our business
caused by natural disasters, other catastrophic events, acts of war
or terrorism, or cyber-security incidents;
- contractual limitations on our ability
to expand our business;
- our reliance on our information
technology infrastructure and outside manufacturers;
- the sufficiency of our trademarks and
other intellectual property rights;
- product concentration;
- our reliance upon, or the loss or
departure of any member of, our senior management team which could
negatively impact our Member relations and operating results;
- U.S. and foreign laws and
regulations applicable to our international operations;
- uncertainties relating to the United
Kingdom's vote to exit from the European Union;
- restrictions imposed by covenants in
our credit facility;
- risks related to the convertible
notes;
- uncertainties relating to the
application of transfer pricing, duties, value added taxes, and
other tax regulations, and changes thereto;
- changes in tax laws, treaties or
regulations, or their interpretation;
- taxation relating to our Members;
- product liability claims;
- our incorporation under the laws of
the Cayman Islands;
- whether we will purchase any of our
shares in the open markets or otherwise; and
- share price volatility related to,
among other things, speculative trading and certain traders
shorting our common shares.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180321005484/en/
Herbalife Ltd.Media Contact:Jennifer Butler, 213-745-0420VP,
Media RelationsorInvestor Contact:Eric Monroe,
213-745-0449Director, Investor Relations
Herbalife (NYSE:HLF)
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