Item 1.01 Entry into a Material Definitive Agreement.
On February 15, 2017 (the “Closing Date”), Herbalife Ltd., a Cayman Islands exempted limited liability company (“Herbalife”),
Herbalife International, Inc., an indirect wholly-owned subsidiary of Herbalife (“HII”), Herbalife International Luxembourg S.à R.L., an indirect wholly-owned subsidiary of Herbalife (“HIL” and, collectively with Herbalife
and HII, the “Revolver Borrowers”), HLF Financing S.à r.l., an indirect wholly-owned subsidiary of Herbalife (“Lux TL Borrower”), HLF Financing US, LLC, an indirect wholly-owned subsidiary of Herbalife (“US TL
Borrower” and, together with Lux TL Borrower, the “Term Loan Borrowers”; the Term Loan Borrowers, together with the Revolver Borrowers, the “Borrowers”), and certain other direct and indirect wholly-owned subsidiaries of
Herbalife, as guarantors (collectively, the “Guarantors”), entered into a $1,450.0 million senior secured credit facility (the “New Credit Facility”), consisting of a term loan facility in an initial aggregate principal
amount of $1,300.0 million (the “Term Loan Facility”) and a revolving facility in an initial aggregate principal amount of $150.0 million (the “Revolving Facility”) with a syndicate of financial institutions as lenders
(the “Lenders”), Credit Suisse Securities (USA) LLC and Coöperatieve Rabobank U.A., New York Branch, acting as joint lead arrangers and joint bookrunners, Credit Suisse AG, Cayman Islands Branch, as administrative agent for the Term
Loan Facility Lenders and collateral agent, and Coöperatieve Rabobank U.A., New York Branch, as an Issuing Bank and as administrative agent for the Revolving Facility Lenders.
The New Credit Facility replaces Herbalife’s existing $425 million senior secured credit facility originally entered into on March 9, 2011 and
amended and restated on May 4, 2015 (as amended, the “Prior Credit Facility”), with a syndicate of financial institutions as lenders and Merrill Lynch, Pierce, Fenner & Smith Inc. and J.P. Morgan Securities LLC, acting as
joint lead arrangers and joint book-runners, and Bank of America, N.A. as administrative agent and collateral agent, which was due to expire in March 2017. All commitments under the Prior Credit Facility were terminated effective the Closing Date.
All obligations of the Borrowers under the New Credit Facility are unconditionally guaranteed by the Guarantors and secured by substantially all of the
assets of the U.S. Guarantors. The Revolving Facility has a
5-year
maturity and the Term Loan Facility has a
6-year
maturity. The New Credit Facility permits the
Borrowers to borrow in U.S. dollars and, subject to certain limitations, in Euros. Borrowings under the Term Loan Facility will bear interest at either the eurocurrency rate plus a margin of 5.50% or the base rate plus a margin of 4.50%. Depending
on Herbalife’s total leverage ratio, borrowings under the Revolving Facility will bear interest at either the eurocurrency rate plus a margin of either 4.50% or 4.75% or the base rate plus a margin of either 3.50% or 3.75%, and will initially
bear interest at the eurocurrency rate plus a margin of 4.75% or the base rate plus a margin of 3.75%. Herbalife will pay a commitment fee on the Revolving Facility of 0.50% per annum depending on the level of Revolving Facility usage. On or prior
to August 15, 2018, amounts voluntarily prepaid under the Term Loan Facility will incur a prepayment premium of 1%; thereafter amounts outstanding under the Term Loan Facility may be prepaid at Herbalife’s option without premium or
penalty, subject to customary breakage fees in connection with the prepayment of a eurocurrency loan.
The New Credit Facility contains affirmative,
negative and financial covenants customary for financings of this type, including, among other things, limitations or prohibitions on declaring and paying dividends and other distributions, redeeming and repurchasing certain other indebtedness,
loans and investments, additional indebtedness, liens, mergers, asset sales and transactions with affiliates. In addition, the New Credit Facility contains customary events of default.