Credit Suisse First Boston and Scotia Capital's $85 million add-on "D" loan for Weight Watchers International (WWI) filled up quickly last week as investors oversubscribed the loan before the March 17 bank meeting. A banker familiar with the situation said "it was a joke" how quickly the deal went, declining to specify the level of oversubscription. He would not comment if there were plans to flex down pricing on the six-year loan from its present LIBOR plus 21/2% level.
The loan will be tacked on to WWI's 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 (LMW 3/17). A CSFB official declined to comment, while a Scotia banker did not return calls.
WWI will now be able to receive full revenues from owning the nine weight loss company franchises directly, rather than receiving just a portion of revenues through WW Group's operations. The transaction is for an undisclosed amount of cash. The entire facility is secured by a first priority lien on the capital stock of each of WWI's subsidiaries and essentially all material property and assets. The credit will now include tranches totaling about $326 million, priced between LIBOR plus 13/4% and 21/2%. Moody's Investors Service rated the new tranche at Ba1 last week, in line with the rest of the facility. European investment firm Artal Luxembourg owns 94% of the company. Calls to Ann Sardini, WWI's v.p. and cfo, were not returned.