PITTSBURGH: Vitamin and herbal supplement retailer GNC has filed for bankruptcy in the United States, 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 late Tuesday night (Jun 23) in the US bankruptcy court in Wilmington, Delaware.
GNC had been trying to reduce its nearly US$900 million debt load amid falling sales at its brick-and-mortar stores when the coronavirus pandemic forced thousands of locations to close temporarily, cutting off a major revenue source. About 2,100 of its 11,000 employees remain on furlough.
The Pittsburgh-based company, whose name is an acronym for General Nutrition Centers, 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, 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.
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Business operations will continue, and fewer than 500 stores remain closed because of the pandemic. The company hopes to emerge from Chapter 11 in the fall.
The company lost US$200.1 million in the first quarter, in part because of the forced closures. It had shuttered 596 underperforming stores from January 2018 to March 2020.
OPERATIONS OUTSIDE THE US
GNC has more than 8,000 stores in around 50 countries, with the majority in the United States. It has 70 stores in Singapore.
In Singapore, as well as in Malaysia, Philippines and Taiwan, the chain is owned by sole franchisee ONI Global.
ONI issued a statement on Wednesday saying that it is not part of GNC's financial restructuring.
"GNC franchise operations will continue expanding in countries under ONI Global Group and remain totally unaffected by GNC Holdings' filing of Chapter 11 for its US operations," it said in a statement posted on the GNC Singapore Facebook page.