GNC 2008 Annual Report Download - page 56

Table of Contents
December 2003 Senior Subordinated Notes. On December 5, 2003, we issued $215.0 million aggregate principal amount of senior
subordinated notes in connection with the Numico acquisition. The senior subordinated notes had a maturity in 2010 and bore interest at the
rate of 81/2% per annum. Substantially all of the December 2003 senior subordinated notes were repurchased pursuant to a tender offer in
connection with the Merger. The balance of the notes were decreased at the same time.
January 2005 Senior Notes. In January 2005, we issued $150.0 million aggregate principal amount of senior notes, with an interest rate
of 8 5/8%. The senior notes had a maturity date in 2011. We used the net proceeds of this offering of $145.6 million, together with $39.4 million
of cash on hand, to repay $185.0 million of the indebtedness under the term loan facility of our December 2003 senior credit facility. The
January 2005 Senior Notes were repurchased pursuant to a tender offer in connection with the Merger.
New $735.0 Million Senior Credit Facility. In connection with the Merger, we entered into the New Senior Credit Facility with a syndicate
of lenders. The New Senior Credit Facility consists of a $675.0 million term loan facility and a $60.0 million revolving credit facility. We borrowed
the entire $675.0 million under the new senior term loan facility, as well as approximately $10.5 million of the $60.0 million new senior revolving
credit facility (excluding approximately $9.4 million of letters of credit), to fund the Merger and related transactions. The $10.5 million borrowing
under the new senior revolving credit facility was repaid by the end of March 2007. The term loan facility will mature in September 2013. The
revolving credit facility will mature in March 2012. The New Senior Credit Facility permits us to prepay a portion or all of the outstanding balance
without incurring penalties (except LIBOR breakage costs). Subject to certain exceptions, commencing in fiscal 2008, the Credit Agreement
requires that 100% of the net cash proceeds from certain asset sales, casualty insurance, condemnations and debt issuances, and a specified
percentage of excess cash flow for each fiscal year must be used to pay down outstanding borrowings. GNC Corporation, our direct parent
company, and our existing and future direct and indirect domestic subsidiaries have guaranteed our obligations under the New Senior Credit
Facility. In addition, the New Senior Credit Facility is collateralized by first priority pledges (subject to permitted liens) of our equity interests and
the equity interests of our domestic subsidiaries.
All borrowings under the New Senior Credit Facility bear interest, at our option, at a rate per annum equal to (i) the higher of (x) the prime
rate (as publicly announced by JPMorgan Chase Bank, N.A. as its prime rate in effect) and (y) the federal funds effective rate, plus 0.50% per
annum plus, in each case, applicable margins of 1.50% per annum for the term loan facility and 1.50% per annum for the revolving credit facility
or (ii) adjusted LIBOR plus 2.25% per annum for the term loan facility and 2.25% per annum for the revolving credit facility. In addition to paying
interest on outstanding principal under the senior credit facility, we are required to pay a commitment fee to the lenders under the revolving
credit facility in respect of unutilized revolving loan commitments at a rate of 0.50% per annum.
The New Senior Credit Facility contains customary covenants, including incurrence covenants and certain other limitations on the ability
of GNC Corporation, us, and our subsidiaries to incur additional debt, guarantee other obligations, grant liens on assets, make investments or
acquisitions, dispose of assets, make optional payments or modifications of other debt instruments, pay dividends or other payments on capital
stock, engage in mergers or consolidations, enter into sale and leaseback transactions, enter into arrangements that restrict our and our
subsidiaries' ability to pay dividends or grant liens, engage in transactions with affiliates, and change the passive holding company status of
GNC Corporation.
The New Senior Credit Facility contains events of default, including (subject to customary cure periods and materiality thresholds)
defaults based on (1) the failure to make payments under the senior credit facility when due, (2) breach of covenants, (3) inaccuracies of
representations and warranties, (4) cross-defaults to other material indebtedness, (5) bankruptcy events, (6) material judgments, (7) certain
matters arising under the Employee Retirement Income Security Act of 1974, as amended, (8) the actual or asserted invalidity of documents
relating to any guarantee or security document, (9) the actual or asserted invalidity of any subordination terms supporting the senior credit
facility, and (10) the occurrence of a change in control. If any such event of default occurs, the lenders would be entitled to accelerate the
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