The company now owes one billion on both term loan and revolving credit facility. The increase in debt was to buy shares. HLF is doing share buyback with burrowed money. Never a good long term move. They cant afford to buy back shares with cash flow. Deterioration in the balance sheet is one key metric of a failing company. The Q1 report will start to show the damage done by Ackman outing the HLF pyramid scheme, unless the SEC acts sooner.
To buyback the shares now at half the price they will be later and pay % on borrowed money, makes total sense.
They could wait until it's $80 and get 10 million shares. Or buy at $40 on borrowed money and get 20 million shares. The interest won't be near the 50% discount they are getting by buying at the lower price.
I won't even get into what taking twice as many shares out of the float will do when Ackman has to cover.
If this company was borderline illegal, do you really think they would buy any shares?