Nu Skin Enterprises, Inc. (NYSE:NUS) disclosed in regulatory filings on Wednesday that it has secured a new $375 million credit facility, and the language in that announcement sparked a bit of a controversy in the media. However, analysts say that investors should not be worried about the language, as it’s pretty standard when a company makes an announcement like this.

Nu Skin

Problems with Nu Skin’s announcement

In a report on the Financial Times’ Alphaville blog, Dan McCrum questioned whether Nu Skin would still be able to pay dividends to its shareholders. In the lengthy agreement, he highlighted a couple of phrases: “restrict the ability of the company and its subsidiaries” and “to make dividends, distributions and prepayments of certain indebtedness.” There are several other restrictions listed in the agreement as well.

Also he states, “the interest rate spread over Libor is only 2.75%.”

Ramey attempts to dispel fears on Nu Skin

Later, Pivotal Research analyst Tim Ramey, a well-known bull on Nu Skin competitor Herbalife Ltd. (NYSE:HLF), contacted McCrum to assure him that Nu Skin will still be able to pay its dividend “if operating within covenants.”

The analyst noted that the company had $219 million in cash at the end of the second quarter, along with $111 million in long-term debt and current debt of $99 million. He stated that Nu Skin paid off those facilities and that “the $127.5 million term loan is drawn in full and $112.5 million of the revolver was also drawn down.”

As a result, the company’s consolidated debt is now $240 million, a slight increase from the previous balance of $210 million. Of course the Libor plus 2.75% interest rate isn’t a good one for a company that has almost no net debt, but Ramey believes that the rate “should calm down some of the running-out-of-cash bear case on Nu Skin.

Others weigh in on Nu Skin’s credit

In a report dated Oct. 15, 2014, Deutsche Bank analysts Bill Schmitz Jr and Faiza Alwy echoed Ramey’s comments. They pointed out that part of the proceeds from the deal were used to pay some of the company’s other outstanding debt, and the rest was left for working capital and “other corporate purposes.”

Management did say in the release that the credit facility will make Nu Skin more flexible so that it can return value to shareholders. The Deutsche Bank team reiterated that the language in the regulatory filing does not mean that the multi-level marketing company will be restricted from making dividend payments. They have maintained their Buy rating and $70 per share price target on Nu Skin Enterprises.