Moody's ups GNC; loan at B1

Moody's Investors Service said it upgraded General Nutrition Centers, Inc.'s corporate family and probability of default ratings to B2 from B3 and assigned a B1 (LGD 3, 43%) rating to the proposed $80 million revolving credit facility and $1.1 billion term loan.

The SGL-2 speculative-grade liquidity rating was affirmed, the agency said.

The outlook is stable.

Proceeds from the proposed $1.1 billion term loan will be used to repay all existing debt and to redeem the majority of the existing preferred stock.

The upgrade reflects the strengthening of General Nutrition's leverage and coverage metrics due to its solid earnings improvement from comparable store sales growth and improving margins as well as the view that the recently announced initial public offering and proposed refinancing significantly reduces the likelihood of an increase in debt levels to finance a sale of the company, Moody's said.

The ratings reflect the company's sizable level of debt and resulting high leverage as well as the risk of sales and earnings volatility that could arise from adverse publicity and product liability claims, the agency said.

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