Herbalife Announces Offering of $1 Billion of Convertible Notes
03 Februar 2014 - 12:30PM
Business Wire
Herbalife Ltd. (NYSE: HLF) today announced that it intends,
subject to market and other conditions, to offer $1 billion
aggregate principal amount of convertible senior notes due 2019
(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 initial purchasers
of the Convertible Notes will be Bank of America Merrill Lynch,
Credit Suisse, HSBC and Morgan Stanley. The company expects to
grant an option to the initial purchasers to purchase up to an
additional $150 million aggregate principal amount of Convertible
Notes. The Convertible Notes are expected to pay interest
semiannually and upon conversion will be settled in cash and, if
applicable, the company’s common shares, based on a conversion rate
to be determined at the pricing of the Convertible Notes. The
Convertible Notes will mature on August 15, 2019, unless
repurchased or converted in accordance with their terms prior to
such date. Prior to May 15, 2019, 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 use the net proceeds from the sale of the
Convertible Notes to fund the cost of repurchasing its common
shares by entering into prepaid forward share repurchase
transactions and the cost of certain capped call transactions,
described below. The company expects to use the remaining net
proceeds from the offering for working capital and general
corporate purposes, including, without limitation, the repurchase
of outstanding common shares.
In connection with the offering, the company intends to enter
into one or more prepaid forward share repurchase transactions
(each a “Forward Transaction”) with one or more of the initial
purchasers (or their respective affiliates) (each a “Forward
Counterparty”), pursuant to which the company will purchase a
specified number of common shares for settlement on or around the
maturity date for the Convertible Notes, subject to the ability of
each Forward Counterparty to elect to settle all or a portion of
its Forward Transaction early. The Forward Transactions are
generally expected to facilitate privately negotiated derivative
transactions between the Forward Counterparties and holders of the
Convertible Notes, including swaps, relating to the common shares
by which holders of the Convertible Notes will establish short
positions relating to the common shares and otherwise hedge their
investments in the Convertible Notes concurrently with, or shortly
after, the pricing of the Convertible Notes.
In addition, in connection with the offering, the company
expects to enter into one or more capped call transactions (each a
“Capped Call Transaction”) with one or more of the initial
purchasers (or their respective affiliates) and/or one or more
other financial institutions (each an "Option Counterparty"). The
Capped Call Transactions are expected generally to reduce the
potential dilution upon conversion of the Convertible Notes in the
event that the market price of the common shares is greater than
the strike price of the Capped Call Transactions, which will
initially correspond to the initial conversion price of the
Convertible Notes, with such reduction of potential dilution
subject to a cap based on the cap price of the Capped Call
Transactions. If the initial purchasers exercise their option to
purchase additional Convertible Notes, the company expects to enter
into one or more additional Capped Call Transactions with the
Option Counterparties.
The company has been advised that, in connection with
establishing their initial hedges of the Capped Call Transactions,
the Option Counterparties expect to purchase the common shares over
a five trading day period immediately following the pricing of the
Convertible Notes. Hedging of the Forward Transactions and Capped
Call Transactions could have the effect of increasing, or reducing
the size of any decrease in, the price of the Convertible Notes or
the common shares concurrently with, or shortly after, the pricing
of the Convertible Notes.
In addition, the Forward Counterparties (or their respective
affiliates) are likely to modify their hedge positions by entering
into or unwinding various derivative transactions with respect to
the common shares and/or by purchasing the common shares or other
securities of the company in secondary market transactions
following the pricing of the Convertible Notes and prior to the
maturity of the Convertible Notes (and are likely to do so during
the final valuation period under the Forward Transactions, which
precedes the maturity date for the Convertible Notes, on or around
any earlier observation period related to a conversion of the
Convertible Notes and on or around any election by a Forward
Counterparty to settle all or a portion of its Forward Transaction
early). Further, the Option Counterparties are likely to modify
their hedge positions by entering into or unwinding various
derivatives with respect to the common shares and/or purchasing or
selling common shares or other securities of the company in
secondary market transactions following the pricing of the
Convertible Notes and prior to the maturity of the Convertible
Notes (and are likely to do so during any observation period
related to a conversion of Convertible Notes).
The effect, if any, of any of these transactions and activities
on the market price of the common shares or the Convertible Notes
will depend in part on market conditions and cannot be ascertained
at this time, but any of these activities could also cause or avoid
an increase or a decrease in the market price of the common shares
or the Convertible Notes, which could affect the ability of holders
of the Convertible Notes to convert the Convertible Notes and, to
the extent the activity occurs during any conversion period related
to a conversion of Convertible Notes, it could affect the amount
and value of the consideration that holders of the Convertible
Notes will receive upon conversion of the Convertible Notes.
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.
The Convertible Notes and any common shares issuable upon
conversion of the Convertible Notes have not been and will not 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 Ltd. (NYSE:HLF) is a global nutrition company
that sells weight-management, nutrition, and personal care products
intended to support a healthy lifestyle. Herbalife products
are sold in over 90 countries through and to a network of
independent distributors. The company supports the Herbalife
Family Foundation and its Casa Herbalife program to help bring
good nutrition to children.
FORWARD-LOOKING STATEMENTS
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:
- any collateral impact resulting from
the ongoing worldwide financial environment, including the
availability of liquidity to us, our customers and our suppliers or
the willingness of our customers to purchase products in a
difficult economic environment;
- our relationship with, and our ability
to influence the actions of, our distributors;
- improper action by our employees or
distributors in violation of applicable law;
- adverse publicity associated with our
products or network marketing organization, including our ability
to comfort the marketplace, regulators and other third parties
regarding our compliance with applicable laws;
- changing consumer preferences and
demands;
- our reliance upon, or the loss or
departure of any member of, our senior management team which could
negatively impact our distributor relations and operating
results;
- 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 market in which we
operate;
- legal challenges to our network
marketing program;
- 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 the
application of transfer pricing, duties, value added taxes, and
other tax regulations, and changes thereto;
- uncertainties relating to
interpretation and enforcement of legislation in China governing
direct selling;
- uncertainties relating to the
interpretation, enforcement or amendment of legislation in India
governing direct selling;
- our inability to obtain the necessary
licenses to expand our direct selling business in China;
- adverse changes in the Chinese economy,
Chinese legal system or Chinese governmental policies;
- our dependence on increased penetration
of existing markets;
- contractual limitations on our ability
to expand our business;
- our reliance on our information
technology infrastructure and outside manufacturers;
- the sufficiency of trademarks and other
intellectual property rights;
- product concentration;
- changes in tax laws, treaties or
regulations, or their interpretation;
- taxation relating to our
distributors;
- product liability claims;
- 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.
Herbalife Ltd.MediaBarbara
Henderson, SVP, Worldwide Corp. Communications213-745-0517orJulian
Cacchioli, VP, Worldwide Corp.
Communications213-745-0519orInvestorsAmy Greene, VP, Investor
Relations213-745-0474
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