Weight Watchers Announces Debt Refinancing

NEW YORK, April 2, 2013 /PRNewswire/ -- Weight Watchers International, Inc. (NYSE: WTW) today announced that it has successfully refinanced its long-term debt.  Weight Watchers used the proceeds from its new term loans to pay off the outstanding borrowings under its previous term loans and revolving credit facilities. 

Mr. Nicholas Hotchkin, Chief Financial Officer of the Company, commenting on the refinancing noted, "As we have indicated before, we are always open to ways to further optimize our capital structure. Our decision to refinance was driven by a unique opportunity to take advantage of robust debt market conditions so that we have greater flexibility to execute our long-term strategic growth agenda, which includes B2B and healthcare as well as opportunistic franchise acquisitions." 

As part of the transaction, the Company's term debt remains $2.4 billion in aggregate principal amount but consists of a new seven year $2.1 billion institutional term loan with an interest rate of LIBOR + 300bp with a 75bp LIBOR floor and a new three year $0.3 billion institutional term loan with an interest rate of LIBOR + 275bp and no floor.  The new term loans have a "covenant-lite" structure, a repayment schedule of 1% of principal per annum prior to maturity and are fully pre-payable.  This represents a multi-year extension on the maturity dates from the Company's previous term loan facilities.

In addition, the Company also announced a new $250 million revolving credit facility with a maturity date of April 2018.  Borrowings under the new revolving credit facility will bear interest at rates determined by leverage levels. At the Company's current leverage level, borrowings under the new revolving credit facility will bear interest at a rate of LIBOR + 225bp.

Accordingly, Weight Watchers announced today that it will prepay its Term B Loan due 2014, Term C Loan due 2015, Term D Loan due 2016, Term E Loan due 2017 and Term F Loan due 2019 with the proceeds from this transaction.  All term loans will be prepaid at par.

The Company expects the annualized impact of the new capital structure to be approximately an incremental $18.0 million of interest expense or $0.20 per fully diluted share.  For 2013, the partial year impact is expected to be approximately $14.0 million or $0.15 per fully diluted share of incremental interest expense versus previous expectations. There will also be a one-time charge associated with the partial write-off of prior refinancing fees which is excluded from the above provided interest expense outlook.

Hotchkin continued, "We are pleased with the strong demonstration of support from the banking and institutional loan community with regard to the strength of our business and strategic outlook. Further, we now also have greater visibility into the anticipated benefits of our cost savings initiative such that we believe these savings will more than offset the new and higher expected 2013 interest expense.  We intend to update investors more broadly on our 2013 outlook when we report earnings for the first quarter of fiscal 2013 in early May."

About Weight Watchers International, Inc.
Weight Watchers International, Inc. is the world's leading provider of weight management services, operating globally through a network of Company-owned and franchise operations. Weight Watchers holds over 40,000 meetings each week where members receive group support and learn about healthy eating patterns, behavior modification and physical activity. WeightWatchers.com provides innovative, subscription weight management products over the Internet and is the leading Internet-based weight management provider in the world. In addition, Weight Watchers offers a wide range of products, publications and programs for those interested in weight loss and weight control.

This news release and any attachments include "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, earnings guidance and any statements about the Company's plans, strategies and prospects. The Company generally uses the words "may," "will," "could," "expect," "anticipate," "believe," "estimate," "plan," "intend" and similar expressions in this news release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: competition from other weight management industry participants or the development of more effective or more favorably perceived weight management methods; the Company's ability to continue to develop innovative new services and products and enhance its existing services and products, or the failure of its services and products to continue to appeal to the market; the effectiveness of the Company's marketing and advertising programs; the impact on the Weight Watchers brand of actions taken by the Company's franchisees, licensees and suppliers; risks and uncertainties associated with the Company's international operations, including economic, political and social risks and foreign currency risks; the Company's ability to successfully make acquisitions or enter into joint ventures, including its ability to successfully integrate, operate or realize the projected benefits of such businesses; uncertainties related to a downturn in general economic conditions or consumer confidence; the seasonal nature of the Company's business; the impact of events that discourage or impede people from gathering with others or accessing resources; the Company's ability to enforce its intellectual property rights both domestically and internationally, as well as the impact of its involvement in any claims related to intellectual property rights; uncertainties regarding the satisfactory operation of the Company's information technology or systems; the impact of security breaches or privacy concerns; the impact of disputes with the Company's franchise operators; the  impact of existing and future laws and regulations; the impact of the Company's debt service obligations and restrictive debt covenants; the possibility that the interests of the Company's majority owner will conflict with the other holders of the Company's common stock; and other risks and uncertainties, including those detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. You should not put undue reliance on any forward-looking statements. You should understand that many important factors, including those discussed herein, could cause the Company's results to differ materially from those expressed or suggested in any forward-looking statement. Except as required by law, the Company does not undertake any obligation to update or revise these forward-looking statements to reflect new information or events or circumstances that occur after the date of this news release or to reflect the occurrence of unanticipated events or otherwise. Readers are advised to review the Company's filings with the Securities and Exchange Commission (which are available from the SEC's EDGAR database at www.sec.gov, at various SEC reference facilities in the United States and via the Company's website at www.weightwatchersinternational.com).

SOURCE Weight Watchers International, Inc.