Moody's rates Weight Watchers loan add-ons Ba1

Moody's Investors Service said it assigned Ba1 ratings with loss-given-default assessments of LGD3 (34%) to Weight Watchers International, Inc.'s $700 million add-on senior secured term loan A facility due 2013 and $500 million add-on senior secured term loan B facility due 2014 and affirmed the company's Ba1 corporate family rating, Ba2 probability-of-default rating, Ba1 $500 million senior secured revolving credit facility due 2011 and $350 million senior secured term loan A facility due 2011.

The loss-given-default assessments on the revolver and term loan A were changed to LGD3 (34%) from LGD3 (32%).

The outlook remains stable.

The proceeds from the $1.2 billion credit facility are expected to be used to fund share purchases, refinance the debt of subsidiary WeightWatchers.com and pay related fees and expenses.

On Dec. 18, Weight Watchers said it began a self-tender offer for up to 8.3 million shares of its common stock and entered into an agreement with Artal Holdings Sp zoo, its majority shareholder, that says Weight Watchers will purchase from Artal shares of its common stock so that Artal's percentage ownership in Weight Watchers after the tender offer will be substantially equal to its current level of 55.2%.

Moody's said that although the announced transaction will result in pro forma leverage and cash flow metrics that are weak for the rating category, these metrics are expected to improve in 2007. The agency also expects profitability in 2007 to benefit from new business initiatives and expects the company to use internal cash generation to repay a portion of the transaction debt.

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