On December 4, 2017, GNC Holdings, Inc. announced that it has decided not to proceed with its previously announced plans to issue, via its wholly-owned subsidiary, General Nutrition Centers, Inc., senior secured notes due 2022 as the terms and conditions offered were not sufficiently attractive to the Company for GNC to move forward. The Company also withdrew its plans to enter into a new senior secured term loan facility and a new senior secured asset-based revolving credit facility. GNC further announced that it has retained Goldman Sachs and Co. LLC as its strategic advisor to help the Board evaluate alternatives to optimize GNC’s capital structure and other alternatives to enhance shareholder value.
On December 5, 2017, S&P Global Ratings lowered its corporate credit rating on GNC Holdings, Inc. to CCC+ from B and its secured credit facility rating to CCC+. According to S&P Global, the ratings were lowered after GNC announced it has withdrawn its proposed refinancing and that the Company has retained Goldman Sachs to explore alternatives for its capital structure. S&P believes that GNC is vulnerable and depends on favorable business or financial conditions to meet its obligations
On December 5, 2017, Moody’s Investors Service downgraded the corporate family rating of General Nutrition Centers, Inc. to Caa1 from B2, its probability of default rating to Caa1-PD from B2-PD and its Senior Secured Term Loan due 2019 to B3 from B1. “The withdrawal of GNC’s proposed refinancing leaves GNC with significant upcoming maturities as it continues to work to stabilize its operating income as it executes its business realignment. Strategic initiatives to reduce debt through alternative means appears necessary to address its capital structure,” says Moody’s Vice President, Christina Boni. Read more on distressed companies.
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