15. Subsequent Events

During April 2024, the Company issued $800 million aggregate principal amount of senior secured notes, or the 2029 Secured Notes, in a private offering in the United States to persons reasonably believed to be qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933, as amended, and outside the United States to non-US persons pursuant to Regulation S under the Securities Act of 1933, as amended. The 2029 Secured Notes are guaranteed on a senior secured basis by each of the Company and the Company's existing and future subsidiaries that is a guarantor of the obligations of any domestic borrower under the Company's senior secured credit facility. The 2029 Secured Notes pay interest at a rate of 12.250% per annum payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2024. The 2029 Secured Notes mature on April 15, 2029. The 2029 Secured Notes were sold at a 2.702% discount to par, or $21.6 million, and the Company estimates its debt issuance cost in connection with the 2029 Secured Notes to be approximately $14.2 million. The Company expects to recognize an initial carrying value of approximately $764.2 million in debt related to the 2029 Secured Notes.

Concurrently with the issuance of the 2029 Secured Notes, the Company entered into certain amendments to the 2018 Credit Facility. The amendments to the 2018 Credit Facility, which, among other things, refinanced and replaced in full the 2018 Credit Facility with, (i) a Term Loan B Facility, or 2024 Term Loan B, with an aggregate principal amount of $400 million and (ii) a revolving credit facility, or 2024 Revolving Credit Facility, with an aggregate principal amount of $400 million. The 2024 Term Loan B Facility was issued to the lenders at a 7.00% discount, or $28.0 million, and the Company estimates its debt issuance cost in connection with the amended 2024 Credit Facility to be approximately $8.1 million. The Company may redeem the 2024 Term Loan B at a 102% premium at any time before the first anniversary, 101% premium following the first anniversary and on or prior to the second anniversary, and, solely in connection with a repricing event, at a 101% premium after the second anniversary but on or prior to the third anniversary, and generally at no premium thereafter. The 2024 Term Loan B requires quarterly payments equal to 5.0% of the aggregate principal amount of the 2024 Term Loan B per annum, commencing in September 2024. The Company expects to recognize an initial carrying value of approximately $363.9 million in debt related to its new 2024 Credit Facility during the second quarter of 2024.

Proceeds from the 2024 Term Loan B together with the proceeds from the 2029 Secured Notes were used to repay indebtedness, including all borrowings outstanding under the 2018 Credit Facility, effectively terminating its $228.9 million outstanding principal balance on its 2018 Term Loan A (as disclosed in Note 4, Long Term debt), and repaying $584.3 million on the 2018 Term Loan B, $170.0 million on the 2018 Revolving Credit Facility, and a portion of its 2025 Notes described further below. For accounting purposes, pursuant to ASC 470, Debt, these transactions are expected to be accounted for as an extinguishment of the 2018 Credit Facility. As a result, the Company expects to recognize $981.0 million as a reduction to long-term debt representing the carrying value of the 2018 Credit Facility repaid in full in the second quarter of 2024. The Company also expects to recognize a loss on extinguishment of approximately $2.5 million, as a result, which will be recorded in other expense, net within the Company’s condensed consolidated statement of income during the second quarter of 2024.

In addition, in April 2024, the Company also redeemed $300.0 million of the 2025 Notes for an aggregate purchase price of $309.1 million, which included $3.2 million of accrued interest. For accounting purposes, pursuant to ASC 470, Debt, this transaction is expected to be accounted for as an extinguishment of the portion of the 2025 Notes redeemed. As a result, the Company expects to recognize $298.8 million as a reduction to long-term debt representing the carrying value of the redeemed 2025 Notes. The $7.1 million difference between the cash paid and carrying value of the redeemed 2025 Notes will be recognized as a loss on the extinguishment of debt and will be recorded in other expense, net within the Company’s condensed consolidated statement of income during the second quarter of 2024. Separately, in April 2024, the Company also repurchased $37.7 million of the 2025 Notes in a private transaction for an aggregate purchase price of $38.9 million, which included $0.5 million of accrued interest and, for accounting purposes, pursuant to ASC 470, Debt, this repurchase transaction is expected to be accounted for as an extinguishment of the portion of the 2025 Notes repurchased. As a result, the Company expects to recognize $37.5 million as a reduction to long-term debt representing the carrying value of the repurchased 2025 Notes. The $0.9 million difference between the cash paid and carrying value of the repurchased 2025 Notes will be recognized as a loss on the extinguishment of debt and will be recorded in other expense, net within the Company’s condensed consolidated statement of income during the second quarter of 2024. The Company borrowed approximately $170 million under its 2024 Revolving Credit Facility in connection with these transactions, and following the completion thereof, the outstanding aggregate principal amount of the 2025 Notes was $262.3 million.

After April 12, 2024, the applicable interest rates on the Company’s borrowings under the 2024 Term Loan B, as amended, will bear interest at either, the Adjusted Term SOFR plus a margin of 6.75%, or the base rate plus a margin of 5.75%. The 2024 Term Loan B Facility matures upon the earlier of (i) April 12, 2029, or (ii) March 16, 2028 if the outstanding principal on the 2028 Convertible Notes, as defined above, exceeds $100.0 million and the Company exceeds certain leverage ratios as of that date, or (iii) June 2, 2025 if the outstanding principal on the 2025 Notes, as defined above, exceeds $200.0 million on such date.

Effective after April 12, 2024, depending on Herbalife’s total leverage ratio, borrowings under the 2024 Revolving Credit Facility will bear interest at either the Adjusted Term SOFR plus a margin of between 5.50% and 6.50%, or the base rate plus a margin of between 4.50% and 5.50%. The base rate represents the highest of the Federal Funds Rate plus 0.50%, one-month Adjusted Term SOFR plus 1.00%, and the prime rate quoted by The Wall Street Journal and continues to be subject to a floor of 1.00%. The Company will pay a commitment fee on the Revolving Facility of, depending on the Company’s total leverage ratio, between 0.35% to 0.45% per annum on the undrawn portion of the 2024 Revolving Credit Facility. The 2024 Revolving Credit Facility matures upon the earlier of (i) April 12, 2028, (ii) December 16, 2027 if the outstanding principal on the 2028 Convertible Notes, as defined above, exceeds $100.0 million and the Company exceeds certain leverage ratios as of that date, or (iii) March 3, 2025 if the outstanding principal on the 2025 Notes, as defined above, exceeds $200.0 million on such date.

The 2024 Credit Facility contains affirmative, negative and financial covenants customary for financings of this type, including, among other things, limitations or prohibitions on declaring and paying dividends and other distributions, redeeming and repurchasing certain other indebtedness, loans and investments, additional indebtedness, liens, mergers, asset sales and transactions with affiliates. In addition, the 2024 Credit Facility contains customary events of default. The 2024 Revolving Credit Facility requires the Company to maintain a maximum total leverage ratio of 4.50:1.00 through December 31, 2024, stepping down to 4.25:1.00 on March 31, 2025 and 4.00:1.00 at September 30, 2025 and thereafter. The financial covenants also include a maximum first lien net leverage ratio of 2.50:1.00, a minimum fixed charge coverage ratio of 2.00:1.00, and a minimum liquidity of $200 million of revolver availability and accessible cash.