GNC Holdings Inc., a Pittsburgh-headquartered global health and wellness brand, and certain of its North American entities, secured lenders and key stakeholders have agreed to pursue a dual-path process that will allow the company to restructure its balance sheet and accelerate its business strategy through Chapter 11 of the U.S. Bankruptcy Code. The company could be restructured or sold.
U.S. and international franchise partners and all corporate operations in Ireland are separate legal entities and are not a part of the filing. GNC and all of its subsidiaries remain open for business.
GNC enters this dual-path process with a signed restructuring support agreement that is executed by more than 92 percent of term lenders and 87 percent of ABL FILO lenders, reaching an agreement on a pre-arranged standalone plan of reorganization.
Additionally, GNC, a significant majority of the supporting secured lenders and Harbin Pharmaceutical Group Holding Co. Ltd., an affiliate of GNC’s largest shareholder, have also agreed in principle for the sale of the company’s business. The term sheet outlines a $760 million purchase price, which would be executed through a court-supervised auction process at which higher and better bids may be presented. If the sale is consummated, it would be implemented instead.
GNC expects to confirm a standalone plan of reorganization or consummate a sale that will enable the business to exit from this process in the fall of this year.
Also, GNC has secured approximately $130 million in additional liquidity through a commitment from certain of its term lenders to provide $100 million in “new money” debtor-in-possession financing, and approximately $30 million from certain modifications to the existing ABL credit agreement.
Over the past year, GNC has been executing a store portfolio optimization strategy to close underperforming stores, while continuing to invest in omnichannel and brand strategies to better meet consumer demand. GNC expects to accelerate the closure of at least 800 to 1,200 stores, which will allow the company to invest in the appropriate areas to evolve for the future, better positioning GNC to meet current and future consumer demand around the world.
