WW International Inc. (NASDAQ: WW) is facing intense pressure as it grapples with more than $1.6 billion in debt and growing competition from weight-loss drugs like Ozempic. However, Galloway Capital Partners, which recently disclosed a 2.87% stake in the company, believes a Chapter 11 bankruptcy filing would be both unnecessary and harmful to equity holders.
What’s at Stake for WW International?
WW International, the parent company of Weight Watchers, has seen its stock price plummet from $1.40 to $0.14 amid speculation about a potential bankruptcy. According to reports, the company is in discussions with bondholders about a court-supervised restructuring. A Wall Street Journal article recently suggested that WW is preparing to file for Chapter 11, leading to panic in the stock market.
Despite the mounting financial challenges, including the growing competition from GLP-1 weight-loss drugs, Bruce Galloway, Chief Investment Officer at Galloway Capital Partners, argues that the company still has strong fundamentals and should avoid bankruptcy. He believes the panic in the stock price is disproportionate to the company’s financial reality.
Galloway’s Stance on Restructuring
Galloway firmly believes that WW does not meet the criteria for insolvency, stating, “You go Chapter 11 if you’re insolvent and can’t pay your bills… this is a company making $200 million.” Instead of pursuing a bankruptcy filing, Galloway advocates for an out-of-court restructuring. This would involve negotiating a deal with creditors to exchange some debt for partial equity, thereby reducing debt while minimizing dilution for current shareholders.
Galloway’s approach aims to reset WW’s balance sheet without pushing the company into bankruptcy, which could damage its stockholder value. He suggests that such a deal could preserve significant upside for both the company and its stakeholders, ensuring a more balanced and sustainable financial future.
Deep Value Opportunity: Galloway’s Perspective
Galloway Capital Partners began building its position in WW around nine months ago, viewing the company as a deep value opportunity. Galloway describes his investment strategy as focusing on businesses that are “wound down like a spring,” meaning companies that have solid fundamentals but have been consistently undervalued by the market due to temporary setbacks.
WW’s financial struggles are a result of several factors, but Galloway believes the company’s strong operational base and brand recognition still position it for a turnaround, particularly if it can navigate its debt challenges without resorting to bankruptcy.
Tracking WW International’s Performance
For investors keen on tracking WW International’s stock performance amid its financial struggles, the Market Biggest Gainers API offers real-time updates on stocks, allowing for the monitoring of any changes in WW’s position relative to market trends.
Explore Market Biggest Gainers API
Conclusion
WW International finds itself at a crossroads, with looming financial pressures and the risk of bankruptcy. However, with strong backing from Galloway Capital Partners, the company has an alternative path forward: a restructuring that avoids the damage of a Chapter 11 filing. As the market awaits further developments, investors will need to stay vigilant, keeping an eye on potential restructuring moves and the company’s ability to regain stability.