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TEXT-S&P on General Nutrition Centers Inc
Aug 2 - Standard & Poor's Ratings Services said today that its 'BB' rating
on General Nutrition Centers Inc.'s tranche B term loan facility due March 2,
2018, remains unchanged following the $200 million increase in the term loan.
The '3' recovery rating, indicating our expectation of meaningful (50% to 70%)
recovery for holders in the event of a payment default, also remains unchanged.
With the completion of the add-on, the company has $1.1 billion outstanding on
the $1.4 billion tranche B term loan facility.
We expect the company to use proceeds to partially fund the previously
announced $300 million share repurchase program by GNC Holdings Inc., General
Nutrition's parent, and for general corporate purposes.
The amendment to the credit agreement for the incremental term loan has the
same terms, including interest rate, and conditions as the original facility.
The restricted payment covenant was also amended to permit General Nutrition
Centers to pay GNC Holdings an additional $50 million of cash dividends. GNC
Holdings and General Nutrition Center's direct and indirect domestic
subsidiaries guarantee the company's credit facility.
The ratings on GNC Holdings and its wholly owned subsidiary General Nutrition
Centers reflect our assessment that the company's financial risk profile is
"significant," given its good cash flow generation, stable credit metrics, and
more moderate financial policies. In our view, the company's business risk
profile is "fair," reflecting GNC's leading position in the highly competitive
and fragmented nutritional supplement specialty retail sector, good
profitability measures, and our expectation for near-term sales growth to be
above the industry average of 3% to 6%.
RELATED CRITERIA AND RESEARCH
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
-- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
RATING LIST
GNC Holdings Inc.
General Nutrition Centers Inc.
Corporate Credit Rating BB/Stable/--
General Nutrition Centers Inc.
$1.4 bil. tranche B term loan fac BB
Recovery Rating 3
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