Herbalife greenshoe exercise increases convertibles to $1.15 billion

By Angela McDaniels

Tacoma, Wash., Feb. 13 - The underwriters for Herbalife Ltd.'s 5.5-year convertible senior notes exercised their $150 million over-allotment option in full, increasing the size of the issue to $1.15 billion, according to an 8-K filing with the Securities and Exchange Commission.

As previously reported, the company priced $1 billion of the convertibles at par on Feb. 4 to yield 2% with an initial conversion premium of 25%.

The Rule 144A deal was sold by joint bookrunners BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc. and Morgan Stanley & Co. LLC.

The bonds are non-callable with no puts. There is takeover and dividend protection.

The deal was completed concurrently with prepaid forward share repurchase transactions, or a borrow facility, and capped call transactions. The cap price of the capped call transactions will initially be $120.79 per common share, which boosts the initial conversion premium from Herbalife's perspective to about 75%.

The proceeds will be used to fund the forward share repurchase and capped call transactions and for working capital and general corporate purposes, including the repurchase of outstanding common shares.

George Town, Cayman Islands-based Herbalife is a nutrition company that makes vitamins, skin creams and meal-replacement shakes.

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