The filing from the Pittsburgh-based retailer will allow it to continue operating while it looks to both restructure its balance sheet and, at the same time, look for a buyer for its business at a starting price tag of $760 million.
GNC’s move follows a growing list of retailers who have succumbed to the economic effects of the coronavirus pandemic, which has not only shuttered physical stores but also forced millions of consumers to re-prioritize their spending practices.
Compounding GNC’s troubles was the company’s significant debt, which it already carried entering the crisis amid faltering sales among its 5,200 U.S. retail locations. GNC also has 1,600 Rite Aid in-store locations, as well as operations in some 50 international markets.
As part of the bankruptcy restructuring, GNC will seek to speed up closures of at least 800 to 1,200 stores, many of which are located in malls and shopping centers that until recently have been shuttered by the pandemic.
The company’s pre-negotiated plan will shutter stores as it looks to emerge leaner. It also reached an agreement in principle to market and sell itself through a court-supervised process, with an initial bidding price of $760 million.
A higher bid could be presented and accepted, and would be implemented instead of just the standalone plan transaction, according to the statement.
The pre-negotiated bankruptcy plan calls for a commitment from some of the company’s lenders, who have agreed to provide GNC with $100 million of new money structured as a debtor-in-possession loan, and an additional $30 million from various changes to the company’s existing credit agreement, the statement said.
GNC was founded in 1935 by David Shakarian, who opened a health-food shop selling yogurt and sandwiches in Pittsburgh and expanded over the years into a global seller of health and nutrition products, including vitamins, minerals and diet and energy supplements.
Shares of GNC Holdings were down 5.81% at 81 cents in trading on Wednesday.