Or then there is this...The other side of the trade.
Barclays Analyst Meredith Adler sought to address concerns over cash flow and maturing debt in her research note.
“Our conclusion is that HLF will have sufficient cash available in the U.S. to repay the debt as it matures, if it chooses not to refinance at the terms that might be available now. The company wants to keep buying back stock, however, so waiting to refinance until after a resolution of the FTC investigation -- assuming it is favorable vs. expectations -- would get it better financing terms, but the stock price is likely to have gone up a lot as well,” according to Adler.
Adler added, “Right now we think the company is looking for financing alternatives but not buying back stock in order to ensure that it has sufficient cash to make the debt payments if that becomes necessary. We do not think the company is close to violating either the leverage or fixed charge coverage covenants in its bank agreement based on our calculation of adjusted EBITDA."
Adler concluded that “HLF has contingency plans related to its costs that can be implemented if cuts become necessary; some initiatives to increase efficiency are already under way.”
