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Tuesday, February 13, 2018

=GNC Holdings (GNC) reported earnings on Tue 13 Feb 2018 (b/o)

GNC Holdings reports EPS in-line, misses on revs; enters strategic partnership and China joint venture agreement with Harbin Pharmaceutical  
  • Reports Q4 (Dec) earnings of $0.25 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.25; revenues fell 2.1% year/year to $557.74 mln vs the $568.8 mln Capital IQ Consensus.
  • Same store sales increased 5.7% in domestic company-owned stores (including in the fourth quarter of 2017. In domestic franchise locations, same store sales decreased 2.0%.
  • Under the terms of the agreement Hayao will invest approximately $300 million in GNC, becoming the single largest shareholder in GNC (on an as converted basis). In addition, GNC and Hayao have agreed to form a joint venture for the manufacturing, marketing, sale and distribution of GNC-branded products in China, leveraging the synergies between Hayao and GNC in the fast growing Chinese market. CITIC Capital Holdings Limited, as a major shareholder of Hayao, is supportive of the transaction.
    • Under the terms of the agreement, Hayao will invest approximately $300 million in GNC in the form of newly issued convertible perpetual preferred shares with a conversion price of $5.35 and a 6.5% annual coupon payable in cash or in kind. The investment is expected to be used by GNC to, among other things, repay outstanding debt and for general corporate purposes, further enhancing GNC's capital position.
  • GNC also announced plans to amend certain terms and extend the maturity date of its existing term loan facility due March 2019. The Company is seeking to extend the maturity date of the facility by two years, to March 2021. Upon effectiveness of the amendment, the maturity date of the term loans held by lenders consenting to the amendment will be extended by two years, the Company's existing Revolving Credit Facility will be cancelled and GNC will enter into a New $100 million ABL Revolver. The Company will also issue a $275 million ABL Term Loan as part of the maturity extension. GNC has the been in discussions with its largest term loan lenders who have indicated their support for the extension until March 2021 and to permit the Company to enter into a new asset based credit facility concurrently with the closing of the proposed amendment and extension. As noted, the Hayao transaction is conditioned upon the successful completion of these negotiations. 

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