Credit Suisse First Boston and Bank of Nova Scotia, riding a hefty oversubscription, are eyeing a price flex for the six-year, $172 million Weight Watchers International "B" term loan. A banker following the deal said, "I would not bet against a tightening of the spread by 1/4% or 1/2%." Buysiders gobbled up the credit that is already priced at a trim LIBOR plus 3%, with bankers citing the improved profile of the once highly leveraged company, following a successful initial public offering in November and repayment of bank debt via a bond issuance. The new "B" will refinance existing debt, priced at LIBOR plus 4% (LMW, 12/10).
The bank debt is rated BB-/Ba1. According to Standard & Poor's, high debt-levels are offset by the firms strong brand name and position. Favorable demographic factors such as increasingly sedentary lifestyles, an aging population and an increasing percentage of adults worldwide who are overweight or obese should help the growth in the weight-control industry, according to S&P.