Business Context and Reporting Period
Company: Herbalife Ltd.
Filing Type: Form 8-K (Current Report)
Date of Report: April 29, 2026
Event: The Company executed a comprehensive debt refinancing strategy, issuing new senior secured notes and amending its existing credit facility to retire high-cost legacy debt.
Key Financial Metrics and Capital Structure
- New Debt Issuance: $800 million aggregate principal amount of 7.750% Senior Secured Notes due 2033.
- Interest Terms (New Notes): 7.750% per annum, payable semi-annually in arrears starting November 1, 2026.
- Debt Retirement: Full redemption of $800 million of 12.250% Senior Secured Notes due 2029.
- Redemption Cost (Old Notes): Approximately $852.8 million (106.125% of principal plus accrued interest).
- Term Loan A Facility: $225 million principal amount.
- Revolving Credit Facility: $425 million principal amount.
- Interest Terms (Credit Facility): Term SOFR + 2.5% to 3.25% or Base Rate + 1.5% to 2.25% (based on leverage ratio).
- Commitment Fee: 0.25% to 0.35% per annum on undrawn revolver.
Material Changes Versus Prior Period
The Company replaced its existing capital structure with lower-cost, longer-duration debt instruments:
- Interest Rate Reduction: Replaced 12.250% coupon debt with 7.750% fixed-rate notes and variable-rate bank facilities, significantly reducing the weighted average cost of debt.
- Maturity Extension: Extended the maturity of the $800 million note tranche from 2029 to 2033.
- Facility Restructuring: Refinanced the prior Term Loan B facility ($365 million outstanding) into a new Term A Facility ($225 million) and a Revolving Credit Facility ($425 million).
- Liquidity Impact: Proceeds from the new issuance and revolver borrowings were used to fully retire the 2029 Secured Notes and the prior Term Loan B, along with paying related fees and expenses.
Guidance, Covenants, and Risks
Financial Covenants
The amended Credit Agreement imposes the following financial maintenance covenants:
- Maximum Total Leverage Ratio: 4.00:1.00
- Maximum First Lien Net Leverage Ratio: 2.50:1.00
- Minimum Fixed Charge Coverage Ratio: 2.00:1.00
Redemption and Call Provisions
- Make-Whole Call: Prior to May 1, 2029, the Company may redeem notes at 100% principal plus a make-whole premium.
- Equity Call: Prior to May 1, 2029, up to 40% of principal may be redeemed with equity proceeds at 107.750%.
- Scheduled Call: On or after May 1, 2029, redemption prices decline from 103.875% (2029) to 100.000% (2031 and thereafter).
- Change of Control: Holders may require repurchase at 101% of principal plus accrued interest upon certain change of control events.
Risks and Contingencies
The Credit Agreement contains customary negative covenants limiting restricted payments, additional indebtedness, liens, mergers, asset sales, and affiliate transactions. Failure to meet financial covenants or events of default could trigger acceleration of debt obligations.
Investor Verification Checklist
- Verify the exact cash outflow for the redemption of the 2029 Secured Notes (approx. $852.8 million) against the Company's current cash position.
- Confirm the Company's current Total Leverage Ratio and Fixed Charge Coverage Ratio to ensure compliance with the new 4.00:1.00 and 2.00:1.00 covenants.
- Review the "Collateral" definition in the Indenture to understand the assets securing the new 2033 Notes and Credit Facility.
- Assess the impact of the reduced Term Loan A principal ($225 million vs. prior $365 million) on the Company's total available liquidity.
- Monitor the Company's leverage ratio to determine if the maturity of the Credit Facility could be accelerated to December 2027 or December 2028 based on outstanding convertible or senior notes.