PITTSBURGH, June 23, 2020 /PRNewswire/ -- GNC Holdings,
Inc. (NYSE: GNC) (the "Company"), a leading global health and
wellness brand, today announced that the Company, certain of its
North American entities, certain of its secured lenders, and key
stakeholders have reached an agreement 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. GNC expects the Chapter 11 process
will benefit its stakeholders and best position the Company for
long-term success. 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.
Consumers will continue to have access to their favorite products,
as well as new, innovative brand solutions to meet their wellness
goals wherever GNC products are sold. GNC continues to serve
consumers through its retail stores in many areas and is offering
safe and convenient curbside pick-up at shopping plaza locations.
The Company also continues to provide solutions for its customers
anytime at GNC.com.
Lender and Stakeholder Support to Enable a Swift, Orderly
Process
Importantly, the overwhelming support of the Company's
creditors will enable GNC to emerge from this process
expeditiously. GNC enters this dual-path process with a signed
restructuring support agreement (RSA) that is executed by more than
92% of Term Lenders and 87% of ABL FILO Lenders (collectively, the
"Supporting Secured Lenders"). The Company and these Supporting
Secured Lenders have reached an agreement on a pre-arranged
standalone plan of reorganization.
Additionally, the Company, a significant majority of the
Supporting Secured Lenders, and Harbin Pharmaceutical Group Holding
Co., Ltd., an affiliate of GNC's largest shareholder, have also
just reached an agreement in principle for the sale of the
Company's business. The term sheet documenting that agreement
outlines a $760 million purchase
price for the sale transaction, which would be executed through a
court-supervised auction process at which higher and better bids
may be presented. The sale transaction is subject to mutually
acceptable definitive documentation. In support of the proposed
sale path, GNC has commenced a comprehensive marketing process for
its business. If the sale transaction is timely consummated as
outlined, it would be implemented instead of the standalone plan
transaction.
GNC's largest vendor and a joint venture partner, IVC, is
working with the Company to ensure a continued supply of products
to the Company and advance the proposed sale of GNC's business.
With the support of its lenders and key stakeholders, the
Company 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.
GNC has secured approximately $130
million in additional liquidity through (i) a commitment
from certain of its term lenders to provide $100 million in "new money" debtor-in-possession
(DIP) financing and (ii) approximately $30
million to come from certain modifications to the existing
ABL credit agreement. The Company is confident that between
financing and cash flow from normal operations, and with the
continued support of its largest vendor, GNC will meet its
go-forward financial commitments as it works to achieve its
financial objectives.
Accelerating Business and Brand Strategy to Evolve GNC for
the Future
As outlined in both potential paths, the Company expects to
use this process to improve its balance sheet and capital structure
while continuing to advance its business strategy, right-size GNC's
corporate store portfolio, and strengthen its brands to protect the
long-term sustainability of its business.
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. This process will enable GNC to accelerate
these strategies, including its store portfolio optimization. GNC
expects to accelerate the closure of at least 800 to 1,200 stores.
This acceleration will allow GNC to invest in the appropriate areas
to evolve for the future, better positioning the Company to meet
current and future consumer demand around the world.
GNC remains committed to delivering wellness solutions to its
consumers through easier and enhanced options to live well, from a
strong product pipeline to an improved e-commerce experience. The
Company will be launching the option to buy-online-pick-up-in-store
later this year and has a robust innovation pipeline of ingredients
and products to bring to market over the next three years. With an
85-year history of science-backed innovation, the GNC brand remains
a strong, trusted source for health and wellness products, which
are increasingly important in today's environment.
Additional Information
GNC's case is being heard in the U.S. Bankruptcy Court for the
District of Delaware. In the
coming days, the Company expects to file in the applicable Canadian
court seeking recognition of the U.S. Chapter 11 proceeding.
Additional information about the case and a current list of
store closures can be found at GNC's dedicated microsite,
www.GNCevolution.com. Claims information can be found at
https://cases.primeclerk.com/GNC.
GNC is advised in this process by Latham & Watkins LLP, FTI
Consulting, and Evercore. The Company has retained the Bank of
China Limited Macau Branch as debt advisor with respect to certain
sale-related financing. Harbin Pharmaceutical Group Holding Co.,
Ltd. is advised by White & Case LLP, Clifford Chance, and Junhe LLP. An ad hoc group
of Supporting Senior Lenders consisting of Term Lenders and ABL
FILO Lenders is advised by Milbank LLP and Houlihan Lokey, and an ad hoc group of
Supporting Senior Lenders consisting of ABL FILO Lenders is
represented by Paul, Weiss, Rifkind, Wharton & Garrison, LLP
and AlixPartners LLP. IVC is advised by Sidley Austin LLP.
About GNC
GNC Holdings, Inc. (NYSE: GNC) is a leading global health and
wellness brand that provides high quality science-based products
and solutions consumers need to live mighty, live fit, live long
and live well.
The brand touches consumers worldwide by providing its products
and services through company-owned retail locations, domestic and
international franchise locations, digital commerce and strong
wholesale and retail partnerships across the globe. GNC's
diversified, multi-channel business model has worldwide reach and a
well-recognized, trusted brand. By combining exceptional
innovation, product development capabilities and an extensive
global distribution network, GNC manages a best in class product
portfolio. As of March 31, 2020, GNC
had approximately 7,300 locations, of which approximately 5,200
retail locations are in the United
States (including approximately 1,600 Rite Aid licensed
store-within-a-store locations) and the remainder are locations in
approximately 50 countries.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 with respect to GNC's financial condition, results of
operations and business that is not historical information.
Forward-looking statements can often be identified by the use of
terminology such as "subject to," "believes," "anticipates,"
"plans," "expects," "intends," "estimates," "projects," "may,"
"will," "should," "can," the negatives thereof, variations thereon
and similar expressions, or by discussions regarding GNC's strategy
and outlook. While GNC believes there is a reasonable basis for its
expectations and beliefs, they are inherently uncertain and subject
to significant business, economic, competitive, regulatory and
other risks, contingencies and uncertainties, most of which are
difficult to predict and many of which are beyond our control.
These risks, contingencies and uncertainties relate to, among other
things: the highly competitive industry in which we operate;
unfavorable publicity or consumer perception of our products;
product innovation; our exploration of new strategic initiatives;
our manufacturing operations; relationships with our vendors; our
distribution network and inventory management; our ability to
develop and maintain a relevant omni-channel experience for our
customers; the performance of, and our relationships with, our
franchisees; the location of our stores; availability of raw
materials; risks related to COVID-19 (novel coronavirus) and its
impacts on our markets (including decreased customer traffic at
malls and other places our stores are located); general economic
conditions; the risk of delays, interruptions and disruptions in
our global supply chain, including disruptions in supply due to
COVID-19 (novel coronavirus) or other disease outbreaks; material
claims or product recalls; regulatory compliance; the value of our
brand name; privacy protection and cyber-security; our current debt
profile and risks related to our capital structure; possible joint
ventures; our key executives and employees; insurance; the timing
and outcome of the Chapter 11 cases and GNC's filing for relief
under Chapter 11; and tax rate risks. GNC undertakes no obligation
to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise. Actual
results could differ materially from those described or implied by
such forward-looking statements. For a more detailed discussion of
important factors that may materially affect such forward-looking
statements, please refer to GNC's Annual Report on Form 10-K for
the year ended December 31, 2019 and
GNC's Quarterly Report on Form 10-Q for the three months ended
March 31, 2020.
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SOURCE GNC Holdings, Inc.
