Vitamin and wellness retailer GNC (NYSE: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.
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.