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CSFB, Scotia To Expand Weight Watchers Facility

16 Mar 2003

Credit Suisse First Boston and Scotia Capital are launching syndication of a $100 million add-on piece to Weight Watchers International's (WWI) existing credit for the company's acquisition of nine of WW Group's 15 franchises in the U.S. and Mexico. WW Group is the largest acquirer of WWI franchises. It operates and owns franchises that conduct Weight Watchers meetings in several U.S. states and parts of Mexico. Pricing on the six-year institutional loan is LIBOR plus 21/2% and the bank meeting is set for today.

David Kang, credit analyst at Standard & Poor's, explained that WWI-owned franchises provide direct revenue to the company, whereas franchises run by operators such as WW Group only provide WWI with a portion of the revenue. WWI reportedly derives a majority of its revenue from membership dues. Scotia and CSFB officials declined comment

The transaction is for an undisclosed amount of cash. The Woodbury, N.Y.-based weight loss company's existing credit was put in place in Dec. 2001. The facility currently includes "A," "B" and "C" pieces totaling about $250 million and priced between LIBOR plus 13/4% and 21/2%. There is also a $45 million revolver priced at LIBOR plus 13/4%.

European investment firm Artal Luxembourg owns 94% of the company. Calls to Ann Sardini, WWI's v.p. and cfo, were not returned, while a spokesman declined to comment because the transaction is still in the due diligence stage.

16 Mar 2003