Why Herbalife Stock Dived by 9% Today

(NYSE: HLF) is going to the well for a pile of new debt financing, and investors aren't very happy about it. Following the company's announcement that it is floating hundreds of millions of dollars of new debt securities, investors aggressively sold out of the shares, to the point where they fell by more than 9% in price on Monday. That was a far higher number than the 0.2% decline posted by the S 500 index on market close.

That morning, Herbalife disclosed that a pair of its fully owned subsidiaries were together floating a $700 million issue of senior secured notes. These mature in 2029, and the company did not specify at what interest rate those notes would pay investors.

The company added that it would use its portion of the proceeds to retire existing debt, pay associated fees and expenses, and for unspecified "general corporate purposes."

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Source Fool.com