GNC files for bankruptcy in US, may close up to 1,200 stores

GNC lost US$200.1 million in the first quarter, in part because of the forced closures. PHOTO: SCREENGRAB FROM GOOGLE MAPS

DELAWARE • GNC Holdings, the parent company of nutrition supplement chain GNC, has filed for bankruptcy, with plans to close at least 800 to 1,200 locations and possibly sell itself.

The 85-year-old company filed for Chapter 11 protection in the United States late on Tuesday night, after its latest effort to manage its debt load unravelled amid the coronavirus pandemic.

Singapore stores appear unaffected. ONI Global, the sole franchisee for GNC in Singapore, Malaysia, the Philippines and Taiwan, said in a statement on Wednesday that it is an independent company unrelated to GNC Holdings. It is thus not part of GNC's financial restructuring.

"GNC franchise operations will continue expanding in countries under ONI Global Group," it said.

GNC had been trying to reduce its nearly US$900 million (S$1.25 billion) debt load amid falling sales at its bricks-and-mortar stores when the pandemic forced thousands of locations to close temporarily, cutting off a major revenue source. About 2,100 of its 11,000 employees remain furloughed.

The Pittsburgh-based firm, whose name is an abbreviation for General Nutrition Centres, plans a "dual-path" restructuring where it would either be sold as a going concern, or improve its balance sheet by shedding more than US$300 million of debt.

GNC said it has agreed in principle with many lenders to sell itself to an affiliate of its largest shareholder, Harbin Pharmaceutical Group, for US$760 million in a court-supervised auction, subject to higher bids. It also said it has lined up US$130 million in new financing, including support from Harbin and International Vitamin Corp, its largest vendor.

Chief financial officer Tricia Tolivar said GNC and 16 affiliates sought court protection with a goal of "operationally re-aligning their businesses", while minimising the impact on customers, employees, landlords and vendors.

REUTERS, BLOOMBERG

With additional information from The Straits Times

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A version of this article appeared in the print edition of The Straits Times on June 26, 2020, with the headline GNC files for bankruptcy in US, may close up to 1,200 stores. Subscribe