UBS Warburg has altered the structure of its financing package for Herbalife International, upsizing the bond portion from $220 million to $250 million. In addition, the $165 million 'B' term loan will be reduced by $5 million and $17 million in mezzanine financing will be shelved. One banker said a shortage of paper for the consumer products sector in Europe is spurring on the $100 million Euro-denominated bond piece. A Herbalife spokesman could not confirm details by press time. UBS officials declined to comment.
The financing package backs the $685 million purchase of Herbalife by Whitney & Co. and Golden Gate Capital. Pricing on the term loan 'B' is LIBOR plus 4%, while the bonds are expected to be priced in the 11-11 1/4 % range. The deal also includes a $25 million revolver priced at LIBOR plus 3 1/2 %.
Some market observers had doubts concerning the credit, citing a list of factors that included the lack of security and a lack of Food and Drug Administration approval on some Herbalife products. But the 'B' filled up, with investors appreciating the low senior leverage ratio and the strong cash flow of the company, bankers said. Senior leverage is approximately 1.4-1.5 times, although total leverage will be closer to 3.5 times.