S&P rates GNC bank facility B+

Standard & Poor's said it assigned its B+ rating to General Nutrition Centers Inc.'s proposed $360 million credit facility and a B- rating to the company's proposed $190 million senior subordinated notes due 2010. The outlook is stable.

The bank loan is rated the same as the corporate credit rating because, under S&P's default scenario, lenders would experience a meaningful, but not full, recovery of principal, the ratings agency said.

Proceeds of the offerings will partially finance the acquisition of General Nutrition Centers by Apollo Management L.P. from Royal Numico N.V.

"The non-investment-grade ratings on GNC reflect the company's recent weak operating performance, product liability risk, and high debt leverage," said S&P credit analyst Ana Lai. "These risks are partly mitigated by GNC's solid market position in the nutritional supplements industry."

S&P said liquidity is adequate and is mainly provided by cash flow from operations and full availability under GNC's $75 million revolving credit facility. Debt amortizations are minimal over the next five years, and capital spending is limited. S&P said cash flow from operations and availability under the revolving credit facility are expected to be sufficient to meet these requirements.

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