| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 16, 2018 (the “Closing Date”), Herbalife Nutrition Ltd., a Cayman Islands exempted limited liability company (“Herbalife Nutrition”), HLF Financing SaRL, LLC, an indirect wholly-owned subsidiary of Herbalife Nutrition (“HLF Financing”), Herbalife International, Inc., an indirect wholly-owned subsidiary of Herbalife Nutrition (“HII”), and Herbalife International Luxembourg S.à R.L., an indirect wholly-owned subsidiary of Herbalife Nutrition (“HIL” and, collectively with Herbalife Nutrition, HLF Financing and HII, the “Borrowers”) entered into a $1.25 billion senior secured credit facility (the “New Credit Facility”), consisting of a $250 million term loan A facility, a $750 million term loan B facility, and a $250 million revolving credit facility with a syndicate of financial institutions as lenders (the “Lenders”), Jefferies Finance LLC, as administrative agent for the Lenders under the term loan B facility and as collateral agent, and Coöperatieve Rabobank U.A., New York Branch, as administrative agent for the Lenders under the term loan A facility and the revolving credit facility.
The New Credit Facility replaces Herbalife Nutrition’s existing $1.45 billion senior secured credit facility originally entered into on February 15, 2017 (as amended, the “Prior Credit Facility”), with a syndicate of financial institutions as lenders, Credit Suisse AG, Cayman Islands Branch, as administrative agent for the term loan facility lenders and collateral agent, and Coöperatieve Rabobank U.A., New York Branch, as administrative agent for the revolving credit facility lenders. All commitments under the Prior Credit Facility were terminated effective on the Closing Date.
All obligations of the Borrowers under the New Credit Facility are unconditionally guaranteed by certain direct and indirect wholly-owned subsidiaries of Herbalife Nutrition, and secured by the equity interests of certain of Herbalife Nutrition’s subsidiaries and substantially all of the assets of the domestic loan parties. The revolving credit facility has a5-year maturity, the term loan A facility has a5-year maturity and the term loan B facility has a7-year maturity. The New Credit Facility permits the Borrowers to borrow in U.S. dollars and, subject to certain limitations, in Euros. Borrowings under the term loan A facility will bear interest at either the eurocurrency rate plus a margin of 3.00% or the base rate plus a margin of 2.00%. Borrowings under the term loan B facility will bear interest at either the eurocurrency rate plus a margin of 3.25%, or the base rate plus a margin of 2.25%. Borrowings under the revolving credit facility will bear interest at either the eurocurrency rate plus a margin of 3.00% or the base rate plus a margin of 2.00%. Herbalife Nutrition will pay a commitment fee on the revolving credit facility of 0.50% per annum on the undrawn portion of the revolving credit facility. On or prior to February 16, 2019, amounts voluntarily prepaid under the term loan B facility will incur a prepayment premium of 1%; thereafter amounts outstanding under the term loan B facility may be prepaid at Herbalife Nutrition’s option without premium or penalty, subject to customary breakage fees in connection with the prepayment of a eurocurrency loan.
The New Credit Facility requires the Company to comply with a leverage ratio. The New Credit Facility also contains affirmative and negative covenants customary for financings of this type, including, among other things, limitations or prohibitions on repurchasing common shares, 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 New Credit Facility contains customary events of default.
The foregoing summary of the New Credit Facility is not complete and is qualified in its entirety by reference to the complete text of the New Credit Facility, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
| Item 1.02 | Termination of a Material Definitive Agreement. |
The disclosure required by this Item 1.02 regarding the termination of the Prior Credit Facility is included in Item 1.01 and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
Senior Notes Due 2026
