You would have known by now that after the COVID-19 outbreak occurred, the whole economy was affected.
Many businesses had to halt operations because it was unsafe for anyone to be out in the open.
And without the income, many businesses had to shut down permanently.
As of now, we’ve seen many restaurants and cafes say goodbye to their customers in heartbreaking posts on their Facebook pages, thanking them for their support over the years they’ve been operating.
We’ve also seen news of popular fashion brand Zara and the go-to coffee place Starbucks closing off more of their outlets.
This time, GNC Holdings, which is a Pittsburgh-based company specialising in health supplements, has announced that it has filed for bankruptcy.
GNC in the US Files for Bankruptcy
GNC has been running for the past 85 years, but it, too, couldn’t withstand the impacts of the COVID-19 outbreak.
It filed for Chapter 11 protection in the US bankruptcy court in Wilmington, Delaware on Tuesday night, and is set to close down at least 800 to 1,200 outlets.
GNC is almost US$900 million (~S$1.25 billion) in debt.
It planned to reduce its debt this year but couldn’t due to Covid-19.
Just in the first quarter of the year, they made a loss of US$200.1 million (~S$279 million).
Right now, 2,100 out of 11,000 employees are still on a leave of absence so that GNC can cut costs during this period of time.
And from January 2018 to March 2020, it has closed down a whopping 596 stores that weren’t doing as well as the others.
So What Now?
GNC has two plans for now and it can go either way – to sell itself or to try its best to reduce its debt by at least US$300 million (~S$418 million).
It sounds almost impossible to shed that much debt, right?
But all hope is not lost.
Undergoing Restructuring
According to GNC, it has already come to an agreement in principle with many lenders that it will be sold to an affiliate of Harbin Pharmaceutical, its biggest shareholder, for US$760 million (~S$1.06 billion).
This will be done in a court-supervised auction, and of course, it could be sold for higher if there are higher bids.
On the bright side, it has also prepared US$130 million (~S$181 million) in new financing for restructuring.
Harbin and International Vitamin Corp, its largest vendor, have both stepped in to lend GNC some support.
Chief Financial Officer Tricia Tolivar explained that GNC and 16 affiliates sought court protection because they intend to operationally re-align their businesses.
At the same time, they want to ensure that their customers, employees, vendors, and landlords are not affected by this too much.
It will also resume business operations even though slightly fewer than 500 stores are still closed due to the outbreak.
They hope that everything will blow over between September and December this year and it will be able to emerge from Chapter 11.
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What about the stores in Singapore?
Can’t do without your protein powder from GNC?
Don’t worry because it seems that the stores in Singapore are not affected.
GNC Singapore has released a statement on their Facebook page saying that business operations will continue because “all US and international franchise partners and corporate entities outside North America are not included in Chapter 11 process”.
If you’re interested to know why, it’s because ONI Global Pte Ltd is “the sole franchisee for GNC in Singapore, Malaysia, Philippines, and Taiwan” so they are not a part of GNC’s restructuring.
In fact, “ONI Global Group is financially robust with a highly successful and self-funding operation”, so the stores will continue to expand in these countries, including Singapore, contrary to its counterpart in the US.
After all, what’s a better time than now when we’re all stuck at home with nothing to do except workouts, right?
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