GNC Holdings Inc. canceled its auction and is moving ahead with plans to sell itself to its Chinese sponsor in bankruptcy court despite recent resistance from U.S. political figures.
The health and wellness company said no other qualified bids emerged by last week’s deadline and, as a result, is seeking approval to sell its assets to its largest shareholder and original bidder,Harbin Pharmaceutical Group Holding Co., according to filings. A hearing to approve GNC’s sale to Harbin will be held Thursday, Sept. 17 in Delaware bankruptcy court.
“Harbin is a long-time and trusted partner of GNC, and we are excited to move forward with them in this process as we seek the Court’s approval of the transaction,” a representative said in an emailed statement to Bloomberg.
U.S. Florida Senator Rubiovoiced concerns over the company’s plans to sell to Harbin last week, citing risk of customers’ personal data being exposed to the Chinese government. In a letter to Treasury Secretary Steven Mnuchin, Rubio requested full review by the Committee on Foreign Investment in the United States of the GNC acquisition.
Harbin’s controlling stake in the retailer was subject to thorough review “for any U.S. national security implications” by CFIUS in 2018, GNC said in an earlier statement. “That transaction was approved, and no facts or circumstances have changed to call the committee’s support into question,” GNC said.
“We will continue to work with all relevant agencies throughout the restructuring process and maintain our rigorous standards for data privacy in compliance with all applicable law,” said the company.
GNC filed for bankruptcy in June with plans to sell itself, cut debt and close under-performing locations. Harbin and other co-investors were named as a so-called stalking-horse bidder of the company’s assets in a court-supervised sale process.
The retailer will ask U.S. bankruptcy judge Karen Owens to approve the sale at Thursday’s hearing, pending objections from other parties in the process. The original agreement set an initial bidding price of $760 million for GNC’s assets.
Read More: GNC Files Bankruptcy to Manage Debt With Plan to Sell Itself
The company will will also seek approval for the sale at a hearing before the Ontario Superior Court of Justice scheduled for Sept. 22, according to a regulatoryfiling. GNC said it expects to complete its restructuring process by year-end.
GNC traces its roots to 1935 when David Shakarian opened a health-food shop selling yogurt and sandwiches in Pittsburgh. The chain rode a wave of interest in nutrition, eventually expanding to over 9,000 outlets. It’s using the bankruptcy process to get out of and renegotiate expensive leases.
The chain sells health and nutrition products worldwide, including vitamins, supplements, minerals, herbs, sports nutrition, diet and energy supplements.
The case is GNC Holdings Inc., 20-11662, U.S. Bankruptcy Court, District of Delaware.
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