Weight Watchers sets Tuesday launch for $3 billion credit facility

By Sara Rosenberg

New York, Feb. 22 - Weight Watchers International Inc. has scheduled a bank meeting for Tuesday to launch a $3 billion credit facility, according to a market source.

J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC are the joint lead arrangers and bookrunners on the deal.

The facility consists of a $300 million revolver, a $1.6 billion term loan A and a $1.1 billion term loan B, the source said.

Early talk on the revolver and term loan A is Libor plus 225 basis points to 250 bps, and on the term loan B is Libor plus 275 bps to 300 bps with a 1% Libor floor and an original issue discount of 99, the source said.

Proceeds will be used to fund the repurchase of common stock and amend and extend the company's existing roughly $1.36 billion senior secured credit facility.

At Oct. 1, 2011, Weight Watchers' existing additional term loan A was priced at Libor plus 100 bps, its term loan B was priced at Libor plus 125 bps, its term loan C and term loan D were priced at Libor plus 225 bps, and its revolver II was priced at Libor plus 250 bps.

For the stock buyback, the company is doing a modified Dutch auction tender offer for up to $720 million of its common stock at a price of $72 to $83 per share.

Also, the company will purchase shares from Artal, which owns about 52% of the company's outstanding shares, at the same price as the one determined in the tender offer. Following the repurchase, Artal's percentage ownership interest in Weight Watchers' will be substantially equal to its current level.

If the tender offer is fully subscribed, the company will repurchase a total of about $1.5 billion of its common stock through the tender offer and the Artal purchase agreement.

The new credit facility is expected to be in place at least five business days prior to the closing of the tender offer.

Weight Watchers is a New York-based provider of weight management services.

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