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S&P: General Nutrition Centers on developing watch
Standard & Poor's said it placed its ratings on General Nutrition Centers Inc., including the B corporate credit rating, on CreditWatch with developing implications.
The placement follows news that GNC is evaluating alternatives that include a possible sale of the company or an initial public offering, the agency said, noting that the sale of the company, which could be financed with a substantial amount of additional debt, may lead to lowered ratings.
The agency said it also assigned its CCC+ rating on GNC Parent Corp.'s $325 million payment-in-kind notes due 2011.
Proceeds from the notes, along with of cash on hand, will be used to redeem the company's preferred stock, repay a portion of its bank debt and pay a dividend to common equity, the agency said, adding that the rating reflects a resulting capital structure that is highly leveraged, with total lease-adjusted debt of about $1.2 billion and expected debt to EBITDA of about 6.3 times.
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