Weight Watchers sets term loan amounts at $1.45 billion, firms pricing

By Sara Rosenberg

New York, March 12 - Weight Watchers International Inc. finalized the sizes on its term loans (Ba1/BB+), opting to get $1.45 billion total of new debt versus initial talk of up to $1.5 billion, according to a market source.

The new debt is comprised of an $850 million five-year term loan E, compared to prior talk of $900 million to $1 billion, and a $600 million seven-year term loan F, compared to prior talk of $500 million to $600 million.

Pricing on the term loan F firmed at Libor plus 300 basis points, the wide end of the Libor plus 275 bps to 300 bps talk, the source said, and a step-down to Libor plus 275 bps was added at 3.75 times total net leverage.

As before, the term loan F has a 1% Libor floor and an original issue discount of 99.

Also, the term loan F saw the addition of 101 soft call protection for one year, the source continued.

The term loan E is priced at Libor plus 225 bps.

Recommitments are due at noon ET on Tuesday.

In addition, the company is seeking an amendment and extension of its existing revolver, term loan A-1 due January 2013, term loan B due January 2014, term loan C due June 2015 and term loan D due June 2016.

The extended term loan B and term loan D loans will be combined into the new term loan F, and that extended term loan A-1 and term loan C loans will have terms matching those of the new term loan E.

Term loan A-1 and term loan B lenders were offered a 20 bps extension fee, and term loan C and term loan D lenders were offered a 7.5 bps extension fee.

All lenders were offered a 5 bps amendment fee.

At Dec. 31, the company had $1,052,000,000 outstanding under its credit facility, $15 million of which was drawn under the revolver.

The various term loans were priced at different rates, ranging from Libor plus 87.5 bps to 225 bps, and the revolver was priced at Libor plus 225 bps at Dec. 31.

The company is getting the new debt for its repurchase of common stock, and the amendment is needed to allow for the borrowings.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch and Scotia Capital (USA) Inc. are the lead banks on the deal.

For the stock buyback, the company launched a modified Dutch auction tender offer for up to $720 million of its common stock at a price of $72 to $83 per share.

The tender offer expires on March 22.

Also, the company will purchase shares from Artal, which owns about 52% of the company's outstanding shares, at the same price as the one determined in the tender offer. Following the repurchase, Artal's percentage ownership interest in Weight Watchers will be substantially equal to its current level.

If the tender offer is fully subscribed, the company will repurchase a total of about $1.5 billion of its common stock through the offer and the Artal purchase agreement.

Weight Watchers is a New York-based provider of weight management services.

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