Please ensure Javascript is enabled for purposes of website accessibility

GNC Declares Bankruptcy, Looks to Sell Business

By Rich Duprey – Jun 24, 2020 at 2:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Vitamin retailer is pursuing a dual-track strategy that could see it reemerge as a standalone company again.

Vitamin and wellness retailer GNC (GNC) filed for bankruptcy protection late Tuesday, saying it planned to close 1,200 of its 7,300 stores.

Having secured financing through a majority of its lenders, as well as Harbin Pharmaceutical, a state-controlled Chinese pharmaceutical that owns 41% of GNC's voting rights, the vitamin stores says it will be able to continue operating until a sale of the company is achieved.

Woman in GNC store

Image source: GNC.

Two roads back

GNC is pursuing a dual track through the bankruptcy process. The first path is to have the company emerge as a stand-alone business with a restructured balance sheet and a focus on international growth. 

The health and wellness retailer says 92% of its term loan lenders and 87% of its asset-backed lenders have signed onto the proposal. They agreed to provide GNC with $130 million in financing to achieve the goal of reviving its business, $100 million of which will come in the form of new debtor-in-possession financing from its term loan lenders.

The second path is to sell off the company. The lenders and Harbin have agreed to help GNC get at least $760 million for the business through a court-supervised auction.

GNC's largest vendor and joint venture partner IVC, a privately held private label vitamin supplier, is also supporting the retailer's dual track reorganization, committing to keeping GNC's shelves stocked through the process.

GNC has been in decline well before the COVID-19 pandemic hit, and began closing hundreds of mall locations in 2018. Its stock had peaked at around $60 a share in 2013, but closed yesterday before the bankruptcy filing at $0.81 per share.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GNC Holdings Stock Quote
GNC Holdings

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.