Moody's rates Weight Watchers loans Ba1

Moody's Investors Service said it assigned a Ba1 rating to Weight Watchers International, Inc.'s proposed senior secured term loan due 2020 and senior secured revolving credit facility due 2018.

Proceeds from the new facility will repay existing term loans and replace the revolver.

The outlook is stable.

Moody's said the Ba1 senior secured rating reflects its expectations for continued steady decline in debt to EBITDA to below 4 times and free cash flow (i.e., cash from operations less capital spending less dividends) of at least $200 million during 2013.

Financial leverage is somewhat higher today than Moody's said it had expected it would be at the close of the March 2012 leveraged share repurchase.

Despite the disappointing operating performance in 2012, Weight Watchers maintains a stable core of meeting and on-line members, which provides some visibility to revenue going forward, the agency said.

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