| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 9, 2022, Herbalife Nutrition Ltd. (the “Company”) issued and sold $250.0 million aggregate principal amount of its 4.25% Convertible Senior Notes due 2028 (the “Notes”) to certain initial purchasers (collectively, the “Initial Purchasers”) pursuant to a purchase agreement between the Company and the Initial Purchasers, dated as of December 6, 2022 (the “Purchase Agreement”). The Company granted the Initial Purchasers an option to purchase, for settlement within a period of 13 days from, and including, December 9, 2022 (the date the Notes are first issued), up to an additional $37.5 million principal amount of the Notes. The Notes were sold to the Initial Purchasers in reliance on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) in a transaction not involving a public offering. The Notes were offered and sold by the Initial Purchasers to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Company relied on these exemptions from registration based in part on representations made by the Initial Purchasers in the Purchase Agreement. The offer and sale of the Notes and the underlying common shares of the Company (the “common shares”) issuable upon conversion, if any, 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 such registration requirements. The issuance of common shares upon conversion, if any, is expected to be exempt from registration pursuant to Section 3(a)(9) of the Securities Act. This Current Report on Form 8-K is neither an offer to sell nor a solicitation of an offer to buy the Notes or the common shares issuable upon conversion of the Notes, and these securities may not be offered or sold in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The offering of the Notes closed on December 9, 2022. The net proceeds from the offering of the Notes, after the Initial Purchasers’ discounts and before offering expenses, were $243.5 million. If the Initial Purchasers exercise their option to purchase additional notes in full, the net proceeds from the offering of the Notes will be approximately $280.0 million.
Indenture and Notes
The Notes were issued pursuant to, and are governed by, an indenture, dated as of December 9, 2022, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Indenture”).
The Notes will bear interest at a rate of 4.25% per year payable semiannually in arrears in cash on June 15 and December 15 of each year, beginning on June 15, 2023. The Notes will mature on June 15, 2028, unless earlier converted, redeemed or repurchased. The Notes are convertible, as described below, into cash or a combination of cash and common shares, at the Company’s option, at an initial conversion rate of 58.8998 common shares per $1,000 principal amount of Notes, equivalent to an initial conversion price of approximately $16.98 per common share, subject to adjustment. If the Notes are converted, the conversion obligation will be settled in cash and, if applicable, common shares.
Holders of the Notes may freely convert their Notes on or after March 15, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date. Prior to March 15, 2028, holders may convert their Notes under any of the following conditions:
| | • | | during any calendar quarter commencing after March 31, 2023 (and only during such calendar quarter), if the last reported sale price of the common shares for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than 130% of the applicable conversion price on each applicable trading day; |
| | • | | during the five consecutive business day period immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of Notes for each trading day of such five trading-day measurement period was less than 98% of the product of the last reported sale price of our common shares and the applicable conversion rate on such trading day; |
| | • | | if the Company calls the Notes for redemption; or |
| | • | | upon the occurrence of customary specified corporate events. |
