GNC Holdings’ Chapter 11

GNC is advised in this process by Latham & Watkins LLP, FTI Consulting, and Evercore. The Company has retained the Bank of China Limited Macau Branch as debt advisor with respect to certain sale-related financing. Harbin Pharmaceutical Group Holding Co., Ltd. is advised by White & Case LLP, Clifford Chance, and Junhe LLP. An ad hoc group of Supporting Senior Lenders consisting of Term Lenders and ABL FILO Lenders is advised by Milbank LLP and Houlihan Lokey, and an ad hoc group of Supporting Senior Lenders consisting of ABL FILO Lenders is represented by Paul, Weiss, Rifkind, Wharton & Garrison, LLP and AlixPartners LLP. IVC is advised by Sidley Austin LLP.

GNC Holdings, Inc. (NYSE: GNC), certain of its North American entities, certain of its secured lenders, and key stakeholders have reached an agreement to pursue a dual-path process that will allow the Company to restructure its balance sheet and accelerate its business strategy through Chapter 11 of the U.S. Bankruptcy Code. GNC expects the Chapter 11 process will benefit its stakeholders and best position the Company for long-term success. U.S. and international franchise partners and all corporate operations in Ireland are separate legal entities and are not a part of the filing.

Additionally, the Company, a significant majority of the Supporting Secured Lenders, and Harbin Pharmaceutical Group Holding Co., Ltd., an affiliate of GNC’s largest shareholder, have also just reached an agreement in principle for the sale of the Company’s business. The term sheet documenting that agreement outlines a $760 million purchase price for the sale transaction, which would be executed through a court-supervised auction process at which higher and better bids may be presented. The sale transaction is subject to mutually acceptable definitive documentation. In support of the proposed sale path, GNC has commenced a comprehensive marketing process for its business. If the sale transaction is timely consummated as outlined, it would be implemented instead of the standalone plan transaction.

GNC’s largest vendor and a joint venture partner, IVC, is working with the Company to ensure a continued supply of products to the Company and advance the proposed sale of GNC’s business.

With the support of its lenders and key stakeholders, the Company expects to confirm a standalone plan of reorganization or consummate a sale that will enable the business to exit from this process in the fall of this year.

GNC has secured approximately $130 million in additional liquidity through (i) a commitment from certain of its term lenders to provide $100 million in “new money” debtor-in-possession (DIP) financing and (ii) approximately $30 million to come from certain modifications to the existing ABL credit agreement.

The company’s largest unsecured creditor is the Bank of New York Mellon Trust, to which GNC owes $157.9 million. Other large creditors are vendors and landlords are Woodbolt Distribution of Bryan, Texas—$4.85 million; Simon Property Group of Chicago, Illinois—$4.56 million; Nutrivo LLC of Nova Scotia, Canada—$4.01 million; Brookfield Property Partners, Chicago—$3.76 million; Optimum Nutrition Inc. of Aurora, Illinois—$3.42 million; and Lifelong Nutrition Inc. of Ontario, Canada—$3.14 million.

GNC Holdings, Inc. (NYSE: GNC) is a leading global health and wellness brand that provides high quality science-based products and solutions consumers need to live mighty, live fit, live long and live well.

International Vitamin Corporation (IVC) manufactures and distributes vitamins and related health products.

The Sidley team was led by Yan Zhang (Picture) and included David M. Grinberg, James A. Snyder, Ken Kansa, Laura E. Baccash and Ethan P. Lindauer.

Lowenstein Sandler has been selected as counsel to the Official Committee of Unsecured Creditors. The Lowenstein team included Michael S. Etkin, Jeffrey Cohen, Michael Savetsky, Nicole Fulfree, Colleen M. Maker, and Lindsay H. Sklar.

Involved fees earner: Jeffrey Cohen – Lowenstein Sandler LLP; Michael Etkin – Lowenstein Sandler LLP; Nicole Fulfree – Lowenstein Sandler LLP; Colleen Maker – Lowenstein Sandler LLP; Michael Savetsky – Lowenstein Sandler LLP; Lindsay Sklar – Lowenstein Sandler LLP; David Grinberg – Sidley Austin LLP; Kenneth Kansa – Sidley Austin LLP; Ethan Lindauer – Sidley Austin LLP; James Snyder – Sidley Austin LLP; Yan Zhang – Sidley Austin LLP;

Law Firms: Lowenstein Sandler LLP; Sidley Austin LLP;

Clients: Bank of New York Mellon; Brookfield Property Partners L.P.; International Vitamin Corporation; Nutrivo; Optimum Nutrition; Simon Property Group, L.P.; Woodbolt Distribution;

Author: Michael Patrini