GNC Holdings is in discussions with a group of lenders to its $275 million L+700 bps FILO term loan and a group of lenders with positions in both the FILO and the $448.4 million L+875 bps tranche B-2 term loan about providing DIP financing as it faces springing maturities on the bank debt, including its $81 million ABL, that could be triggered on June 15, according to sources.
On May 15, GNC
announced it extended the springing maturity on the FILO and B-2 term loans and its ABL to Aug. 10 from May 16. Under the terms of the amendment, the springing maturity would be triggered on June 15 if on or after that date the company’s liquidity falls below $100 million and holders of more than 25% of any class of the credit facility debt elect to accelerate.
As of May 11, GNC
had $127 million of cash on hand after drawing $30 million on the ABL in April, bringing total revolver borrowings to $60 million, according to CFO Tricia Tolivar.
CEO Ken Martindale said on the May 11 earnings call that management made the decision to close many stores on the basis of declining traffic or placement within a mall that was closed, even though GNC stores were deemed “essential” and thus allowed to remain open. At the end of April, 40% of GNC stores in the U.S. and Canada were closed, with about 40% of the corporate workforce on furlough, Martindale said. Earnings pressure is anticipated to continue through 2020 but lessen as the year continues, he said.
As of March 31, the company had 7,300 locations in about 50 countries, with about 5,200 stores in the U.S.
GNC Holdings Inc. is
working with UBS as investment banker and Evercore as restructuring advisor, Reorg reported. A group of FILO lenders has
organized with Paul Weiss as legal advisor, and a group of lenders to the term loan B-2 and FILO term loan has organized with Milbank as legal advisor and Houlihan Lokey as financial advisor.
GNC did not immediately respond to a request for comment.
--Harvard Zhang