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Investing.com -- On May 6, 2025, WW International (NASDAQ:WW) Inc. filed for Chapter 11 bankruptcy protection. As a result, S&P Global Ratings downgraded its issuer credit rating on the company to ’D’ from ’CCC-’ on May 7, 2025. Additionally, S&P Global Ratings also lowered its issue-level ratings on all the company’s rated debt instruments to ‘D’.
The downgrade comes after WW International sought protection under Chapter 11 of the U.S. Bankruptcy Code. The company entered into a restructuring support agreement with about 72% of its revolving credit facility and term loan lenders and 4.5% of senior secured noteholders. This agreement is expected to reduce the company’s total outstanding debt to $465 million from $1.6 billion.
WW International initiated prepackaged Chapter 11 cases in the U.S. Bankruptcy Court for the District of Delaware. The company’s revolving credit facility lenders, term loan lenders, and senior secured noteholders will receive a pro rata share of $465 million in new senior secured debt due in 2030 and 91% of new common equity of the reorganized company. This restructuring is expected to reduce the annual interest expense to approximately $50 million from about $100 million.
WW International plans to finance its operations during the Chapter 11 proceedings with its cash on hand. The company expects this to more than cover restructuring and transaction expenses. Earlier this year, the company fully drew down its revolving credit facility. As of March 29, 2025, it had $263 million cash on hand, which includes revolving credit facility borrowings of $171 million.
The company aims to emerge from bankruptcy within 45 days and continue as a public company. Once this occurs, S&P Global Ratings will reassess its issuer credit rating based on the company’s new capital structure and business strategy. WW International will continue to operate fully during the reorganization, and all trade and other general unsecured creditors will be paid in full.
The company’s decision to file for bankruptcy follows several years of declining subscriber numbers, revenue, and EBITDA. This has been attributed to weaker demand for Weight Watchers services, particularly among younger consumers, and increased competition from newer brands, GLP-1 weight loss drugs, and other weight loss alternatives.
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