WeightWatchers 2006 Annual Report Download - page 81

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
with the refinancing, WWI’s Term Loan B and Additional Term Loan B in the aggregate amount of $294,375
were repaid and replaced with a new Term Loan A in the amount of $350,000 (the “Term Loan A”). The
additional funds of $55,625 were used to pay down the revolving line of credit. Also, in connection with this
refinancing, WWI’s then existing revolving line of credit was repaid and replaced with a new revolving line of
credit (the “Revolver”) which increased borrowing capacity from $350,000 to $500,000. At December 30, 2006,
WWI had $184,134 of availability under the Revolver. The WWI Credit Facility, as refinanced, now has a
maturity date of June 30, 2011.
In connection with the early extinguishment of debt resulting from this refinancing, the Company recorded a
charge of $1,321 in the second quarter of 2006 relating to the write-off of a portion of the deferred financing
costs associated with its old debt.
WWI’s Term Loan A and the Revolver bear interest at an initial rate equal to LIBOR plus 0.875% per
annum or, at WWI’s option, the alternate base rate (as defined in the WWI Credit Facility). In addition to paying
interest on outstanding principal under the WWI Credit Facility, WWI is required to pay a commitment fee to the
lenders under the Revolver with respect to the unused commitments at an initial rate equal to 0.175% per annum.
The WWI Credit Facility contains customary covenants including covenants that in certain circumstances
restrict WWI’s ability to incur additional indebtedness, pay dividends on and redeem capital stock, make other
restricted payments, including investments, sell its assets and enter into consolidations, mergers and transfers of
all or substantially all of its assets. The WWI Credit Facility also requires WWI to maintain specified financial
ratios and satisfy financial condition tests. At December 30, 2006, WWI complied with all of the required
financial ratios and also met all of the financial condition tests and is expected to continue to do so. The WWI
Credit Facility contains customary events of default. Upon the occurrence of an event of default under the WWI
Credit Facility, the lenders thereunder may cease making loans and declare amounts outstanding to be
immediately due and payable. The WWI Credit Facility is guaranteed by certain of the Company’s existing and
future subsidiaries, other than WW.com. Substantially all the assets of WWI collateralize the WWI Credit
Facility.
On June 13, 2006, Standard & Poor’s confirmed its “BB” rating for WWI’s corporate credit and assigned a
“BB+” rating to the WWI Credit Facility. On September 22, 2006, Moody’s assigned a “Ba1” rating to WWI’s
corporate credit and the WWI Credit Facility.
WW.com Credit Facilities
On December 16, 2005, WW.com, borrowed $215,000 pursuant to two credit facilities (the “WW.com
Credit Facilities”), consisting of (i) a five year, senior secured first lien term loan facility in an aggregate
principal amount of $170,000 (the “First Lien Term Credit Facility”) and (ii) a five and one-half year, senior
secured second lien term loan facility in an aggregate principal amount of $45,000 (the “Second Lien Term
Credit Facility”). The WW.com Credit Facilities are governed by two credit agreements among WW.com, Credit
Suisse, as administrative agent and collateral agent, and the lenders party thereto.
The First Lien Term Credit Facility bears an interest rate equal to LIBOR plus 2.25% per annum, or, at
WW.com’s option, the alternate base rate, as defined, plus 1.25% per annum. The Second Lien Term Credit
Facility bears an interest rate equal to LIBOR plus 4.75% per annum or, at WW.com’s option, the alternate base
rate, as defined, plus 3.75% per annum.
Loans outstanding under the WW.com Credit Facilities (i) must be prepaid with certain percentages of
excess cash flow and net cash proceeds of asset sales, issuances, offerings or placements of debt obligations of
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