PITTSBURGH, Penn. – GNC Holdings Inc., the parent company of nutrition retailer GNC, filed for Chapter 11 bankruptcy protection from creditors late Tuesday night. GNC, which blamed the COVID-19 pandemic for the bankruptcy, also said the bankruptcy process could lead to an outright sale of the company, with a minimum purchase price of at least $760 million.
GNC said it had reached a deal with some of its secured lenders for $130 million in financing and it would continue operations through the bankruptcy process and work toward a prearranged reorganization plan by a number of its creditors. GNC also announced it had reached an agreement in principle for the $760 million sale of the company with the agreement of a “significant majority” of secured lenders and Harbin Pharmaceutical Group Holding Co. Ltd., GNC’s largest shareholder.
The company termed the restructuring as dual-track, leading either to a standalone recovery or through a sale process. GNC said it had begun a marketing process for the business and the sale could be implemented instead of emerging from bankruptcy.
“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 said in a statement.
In its filing Tuesday night in U.S. Bankruptcy Court, GNC estimated its total debts as $895 million and total assets of $1.4 billion. It said it had more than 100,000 creditors, and its largest unsecured claim was $157.9 million to The Bank of New York Mellon Trust Co. in Pittsburgh.
GNC also said it was accelerating plans to close at least 800 to 1,200 stores and had reached a deal with its largest vendor, IVC, to continue to supply the business.
“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 said in a statement.
The Chapter 11 bankruptcy was filed by GNC Holdings and 16 other entities in U.S. Bankruptcy Court in Delaware; its franchise and international operations aren’t included in the filing.
GNC had deadlines on term loans and a credit facility that, in mid-June, had been extended from June 15 to June 30 and had said at the time that it was exploring “all strategic options available to it.” It had said previously that a Chapter 11 filing could be an option, following its $200 million loss in the first quarter of 2020.
GNC has 7,300 stores worldwide, including 5,200 retail locations in the United States that includes a presence in about 1,600 Rite Aids.
In a letter to consumers posted on its website, GNC said it had been under financial pressure for the last several years.
“We were making significant progress and were focused on refinancing the business to allow us to position ourselves for long-term growth,” the letter said. “However, the Covid-19 pandemic created a situation where we were unable to accomplish our refinancing and the abrupt change in the operating environment had a dramatic negative impact on our business.”
GNC has several locations in Kansas including stores in Salina’s Central Mall, as well as Emporia, Fort Riley, Hays, Lawrence, Leavenworth, Manhattan, Meriam, Olathe, Overland Park, Shawnee, Topeka and Wichita. The company did not announce any store closures Wednesday.