Herbalife plans shares offering of $103 million.

Herbalife International Inc., the Inglewood-based multi-level marketer of weight-loss and health products with a colorful history, has filed papers with the Securities and Exchange Commission to sell up to $103.5 million of stock.

New York-based Salomon Bros. and NatWest Securities Ltd., a major British brokerage with offices in New York, will handle the stock offering.

Phoenix-like Herbalife, started in an old Beverly Hills wig factory by youthful Mark Hughes in 1980 -- he's still only 37, also revealed plans to enter the catalog sales business, a new venture that may come as a surprise to its global sales force of 41,000 independent supervisor multi-level marketers.

Herbalife has been growing anew on the basis of spectacular sales in Europe. Worldwide retail sales more than doubled to $405.2 million in 1992 from $191 million in 1991.

Sales could double again this year. In the first quarter, company retail sales jumped by almost exactly 100 percent, to $151.7 million from $75.8 million a year earlier. Profits hit $8.7 million, up 130 percent.

Domestic sales have been strong also, largely due to the success of its "Thermojetics" weight-control system, which includes the use of herbal tablets.

(In its SEC filings, Herbalife reports "retail sales," which is the estimated gross sales of its force of multi-marketers. The company's net sales -- what it receives from its marketers -- are about half of the reported retail sales.)

The boom in sales marks a storybook reversal of fortunes for once-ailing Herbalife.

The herb-pill empire was nearly left for dead in the mid- to late-1980s, after lengthy federal Food and Drug Administration and state investigations into the effectiveness of the company's products and its advertising claims. In 1986, Herbalife settled all claims against it, and also paid an $850,000 fine to the State of California.

Critics said among other shortcomings, the company had relied upon the advice of Richard Marconi, who professed to hold a Ph.D. in nutrition. Marconi's company manufactured Herbalife's pills -- but, in fact, Marconi's doctorate was bogus, a mail-order certificate from a correspondence school in Huntington Beach. According to Herbalife counsel David Addis, Orange-based D&F Industries Inc., in which Marconi is a officer and shareholder, still manufactures the bulk of Herbalife's pills.

Following the FDA and state charges in the 1980s, Herbalife's sales sagged and its stock plummeted to below $1 a share amid red ink. As late as 1991 a share of Herbalife could be had for 50 cents.

But in trading last week, Herbalife commanded about $13 a share. Still, not all is rosy with the stock -- it traded as high as $18 a share in late July.

Company officials last week said they could not explain the recent price plunge, although they attributed the long price rise to the healthy profit picture.

Company counsel and director Addis last week said that "no announcements regarding the recent price decline" have been made.

No major brokerage houses have analysts covering Herbalife. One short trader (a speculator who believes the price of a stock will go down) last week said he thinks the stock is overpriced, because recent sales growth overseas cannot be duplicated in coming years.

Too, the heavy insider selling into the offering -- company officers, including founder Hughes, are unloading 3 million of the 5 million shares to be offered -- has spooked the market, said the short trader, who asked not to be identified.

And lastly, Herbalife's old nemesis, the FDA, may force the company to reformulate its Thermojetic pills. An FDA official on Aug. 5 said his agency has repeatedly publicized concerns about a key ingredient in the Thermojetic pill, called ephedrine. Herbalife officials have stated that reformulating a pill is not a major worry.

Herbalife pills and products are not sold in stores, but rather through networks of supervisors and multi-level marketers.

In such organizations, people who may hold down "regular jobs," or housewives, or those seeking unscheduled part-time work, or others may buy product from Herbalife, and then resell it. They are independent contractors.

Generally speaking, the retail sales price is double the wholesale, or net price, received by Herbalife.

The multi-level marketers also garner a fraction of the income generated by people they attract to the Herbalife organization, an arrangement sometimes called "pyramid marketing."

However, in a move that may cause conflict with the existing sales force, Herbalife revealed in its prospectus that $25 million of the proceeds from the stock offering will be devoted to creating a catalog sales business, and that even more investment in the catalog business will follow that start-up capital.

A company spokesman, hemmed in by SEC "quiet" rules, said he could not reveal much about the new catalog venture. "It will supplement and help our distributors," said company spokesman Mallory Factor. "But I can't go beyond what is in the prospectus."

However, the prospectus does not detail what kinds of products will be sold in the planned Herbalife catalogues.

Founder and chairman Hughes last week could not be reached for comment, and his secretary said he no longer grants interviews to the press.

Hughes' lawyers on the stock offering, Edmund Kaufman and Anthony Iler of the law firm Irell & Manella, also could not be reached for comment.

Herbalife distributors reached last week evidently had no inkling of the Herbalife plans to devote $25 million to starting a catalog venture.

"I really don't know what you are speaking of. I really can't answer that," said Bourque Noel, a local Herbalife distributor. Other distributors vowed that Herbalife products would not be sold through catalogs because that would undermine their own sales.

The prospectus also revealed that Hughes, the high-school dropout who started Herbalife, earned $6.7 million in salaries and bonuses last year, and $2.9 million in 1991.

Hughes may also be one of California's richest people; the prospectus revealed he will own 17.6 million shares of Herbalife after the offering -- a dominant 61.8 percent stake in the 13-year-old enterprise and worth about $228 million, at recent trading prices.

It is a fortune built on the repeatedly advertised promise that Herbalife pills and programs can improve health in a variety of ways, from increasing pep, to losing weight to even controlling epilepsy.

For example, a May 1988 Herbalife Journal magazine cited the case of a 10-year-old boy in British Columbia whose epilepsy was much improved after using Herbalife products, despite earlier failures with conventional medicines.

Also in 1988, Herbalife introduced the App-Attack Diet Disc. The app-attack disc "contains Appezyme, a compound derived from herbal and mineral sources," said company literature.

The disc would affect a part of the brain, called the appestat, that controls appetite, and reduce "abnormal cravings," according to company literature.

Herbalife still has occasional trouble with feisty regulators; Canada this year barred the Thermojetic pills, and then forced the company to reduce the level of ephedrine in the product. The FDA has said that ephedrine has been associated with "hypertension, palpitations, neuropathy" and other ailments.