UBS Warburg has altered the structure of its deal for Herbalife International, backing the $685 million purchase by Whitney & Co. and Golden Gate Capital, upsizing the bond portion from $220 million to $250 million. The $165 million "B" term loan will be reduced $5 million, while $17 million of mezzanine financing will be shelved. A banker said a shortage of paper for the consumer products sector in Europe is spurring on the $100 million European bond piece. The U.S. piece will be $150 million. Pricing is expected to be in the 11-11 1/4% region.
Pricing on the $160 million term loan "B" for Herbalife is LIBOR plus 4%. The deal also includes a $25 million revolver priced at LIBOR plus 3 1/2%. Senior leverage is approximately 1.4/1.5 times and total leverage will be closer to 3.5 times. Some market observers had doubts concerning the credit, citing a list of factors including the lack of security, a lack of Food and Drug Administration approval on some Herbalife products and the tiered sales structure whereby commission is collected by those who recruit others to sell the company products. But the "B" filled up, with investors appreciating the low senior leverage and the strong cash flow of the company, bankers said. A Herbalife spokesman could not confirm details by press time.