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Herbalife Ltd. Message Board

  • getintoh20 getintoh20 Feb 4, 2014 6:35 AM Flag

    initial conversion price of approximately $86.28 per common share

    The Convertible Notes will pay interest semiannually at a rate of 2.00% per annum and upon conversion will be settled in cash and, if applicable, the company’s common shares, based on the applicable conversion rate at such time. The Convertible Notes have an initial conversion rate of 11.5908 common shares per $1,000 principal amount of the Convertible Notes (which is equal to an initial conversion price of approximately $86.28 per common share), representing an initial conversion premium of approximately 25% above the last reported sale price of $69.02 per common share on February 3, 2014. The Convertible Notes will mature on August 15, 2019, unless repurchased or converted in accordance with their terms prior to such date. Prior to May 15, 2019, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date. The company expects to close the sale of the Convertible Notes on or about February 7, 2014, subject to the satisfaction of various customary closing conditions.

    The company estimates that the net proceeds from the sale of the Convertible Notes will be approximately $975 million, after deducting the initial purchasers’ discounts and commissions and the estimated offering expenses payable by the company. The company intends to apply approximately $686 million of the net proceeds to fund the cost of purchasing common shares by entering into prepaid forward share repurchase transactions and approximately $111 million of the net proceeds to fund the cost of certain capped call transactions, each as described below. The company expects to use the remaining net proceeds from the offering for working capital and general corporate purposes, including, without limitation, the repurchase of outstanding common shares.

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    • The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of the common shares is greater than the strike price of the Capped Call Transactions (which initially corresponds to the initial conversion price of the Convertible Notes and is subject to certain adjustments under the terms of the Capped Call Transactions), with such reduction of potential dilution subject to a cap based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions will initially be $120.79 per common share, representing a premium of approximately 75% above the last reported sale price of $69.02 per common share on February 3, 2014, and is subject to certain adjustments under the terms of the Capped Call Transactions. If the initial purchasers exercise their option to purchase additional Convertible Notes, the company expects to enter into one or more additional Capped Call Transactions with the Option Counterparties.

 
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