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Herbalife Ltd. Message Board

  • getintoh20 getintoh20 Feb 20, 2014 12:41 PM Flag

    From yesterday earnings call

    Let me provide some details on the specifics. First, the coupon on this debt is only 2%, not much different than our dividend. And since we are using the net proceeds to buy back stock, we are saving on the dividend. For example, a 2% coupon on $1.15 billion debt deal is $23 million annually in cost.

    With the repurchases expected from the net proceeds of this deal, we will save approximately $17 million annually in dividend. So on a net cash basis, it is costing the company approximately $6 million annually to borrow $1.15 billion, an economically strong deal for the company and its shareholders.

    Second, the company effectively repurchased 9.9 million shares through the prepaid forward as part of this debt transaction. The economics of this deal pass through to the company immediately even though the shares will not be delivered until the end of the contract. To be clear, for accounting purposes and for dividend purposes, these shares are out of our share base as of February 7.

    The additional approximately $300 million in net proceeds is expected to be used to buy back stock over the next 3 months.

    Depending on the share price, we expect to repurchase a total of 14 million to 14.5 million shares through the prepaid forward in our outright buybacks as a result of this transaction.

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HLF
30.44-0.57(-1.84%)Mar 2 4:01 PMEST

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