GNC 2009 Annual Report Download - page 58

Table of Contents
Cash Used in Financing Activities
We used cash from financing activities of $8.0 million in 2008 for required payments on long term debt and received $5.4 million from
borrowings on the Revolving Credit Facility.
We received cash from financing activities of $1,641.4 million in 2007. The primary uses of this cash were: (1) proceeds from the issuance of
the Senior Notes and Senior Subordinated Notes, (2) borrowings under the Senior Credit Facility, and (3) issuance of new equity.
We used cash in financing activities of $112.2 million for the year ended December 31, 2006. The primary uses of this cash were a restricted
payment of $49.9 million to the holders of GNC common stock, $20.3 million returned to GNC Corporation to fund $1.7 million in deferred IPO
costs and a $19.0 million payment by GNC Corporation related to the redemption of its 12% Series A Exchangeable Preferred Stock offset by
$0.4 million in proceeds contributed to us from GNC Corporation's common stock activity, and $42.0 million in debt payments, which included a
$40.0 million payment in November 2006 under our December 2003 term loan facility.
$735.0 Million Senior Credit Facility. In connection with the Merger, we entered into the Senior Credit Facility with a syndicate of lenders.
The 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 senior term loan facility, as well as approximately $10.5 million of the $60.0 million 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
senior revolving credit facility was repaid by the end of March 2007. As of December 31, 2008 and 2007, $6.2 million and $6.5 million was
pledged to secure letters of credit, respectively. The term loan facility will mature in September 2013. The revolving credit facility will mature in
March 2012. The 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 Senior Credit Facility. In addition, the 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 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, at December 31, 2008, in each case, applicable margins of 1.25% per annum for the term loan facility and 1.0% per annum for the
revolving credit facility or (ii) adjusted LIBOR plus 2.25% per annum for the term loan facility and 2.0% 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 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 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 52