Oprah Winfrey’s decision to invest $43 million of cash equity into Weight Watchers International Inc. and join its board are credit positives, according to Moody’s, but they are not enough to elevate the company’s B3 rating, which leaves its debt firmly in junk territory. Oprah may be able to help steer the management and marketing of the company and its services from her position on the board, Moody’s said in a note. “However, given the company’s disappointing 2015 performance, weak credit metrics and the lack of information regarding new products and programs for the 2016 diet season, the B3 Corporate Family and senior secured ratings and the negative ratings outlook are unchanged at this time,” the agency wrote. Weight Watchers has about $144.3 million of term loans coming due in April of 2016, so the cash investment will improve liquidity. It also has a $50 million revolving credit facility, which was fully drawn as of July 2, said Moody’s. Weight Watchers business is very seasonal, with most new customers joining in January or February, typically drawn in by a celebrity endorsement. Oprah may fill the gap left this season, when there was no celebrity on hand either before or after the traditional diet season, a factor that may have dented the company’s performance, said Moody’s.
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