GNC 2009 Annual Report Download - page 99

Table of Contents
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the fourth quarter of 2008, the Company attempted to borrow $6.0 million under the Revolving Credit Facility. As a result of the lender
electing to not fund its pro-rata share, the Company received $5.4 million. The Company pays interest based on the aggregate available
amount of the credit facility at a per annum rate equal to 0.5%. The Company pays interest on outstanding borrowings on the revolving credit
facility at a Eurodollar rate or Adjusted Base Rate (ABR) plus the applicable margin in effect. As of December 31, 2008 and 2007, the ABR was
4.25% and 8.5%, respectively. The Company also pays an additional interest rate of 2.25% per annum on all outstanding letters of credit
issued. As of December 31, 2008 and 2007, $6.2 million and $6.5 million, respectively, of the Revolving Credit Facility was utilized to secure
letters of credit. The Company had outstanding ABR borrowings under the revolving credit facility of $5.4 million at December 31, 2008. No
amounts were outstanding at December 31, 2007.
Senior Toggle Notes. In connection with the Merger, the Company completed a private offering of $300.0 million of Senior Floating Rate
Toggle Notes due 2014 at 99% of par value. The Senior Toggle Notes are the Company's senior noncollateralized obligations and are
effectively subordinated to all of the Company's existing and future collateralized debt, including the 2007 Senior Credit Facility, to the extent of
the assets securing such debt, rank equally with all the Company's existing and future non collateralized senior debt and rank senior to all the
Company's existing and future senior subordinated debt, including the 10.75% Senior Subordinated Notes. The Senior Toggle Notes are
guaranteed on a senior non collateralized basis by each of the Company's existing and future domestic subsidiaries (as defined in the Senior
Toggle Notes indenture). If the Company fails to make payments on the Senior Toggle Notes, the notes guarantors must make them instead.
The Company may elect in its sole discretion to pay interest on the Senior Toggle Notes in cash, entirely by increasing the principal amount
of the Senior Toggle Notes or issuing new Senior Toggle Notes ("PIK interest"), or on 50% of the outstanding principal amount of the Senior
Toggle Notes in cash and on 50% of the outstanding principal amount of the Senior Toggle Notes by increasing the principal amount of the
Senior Toggle Notes or by issuing new Senior Toggle Notes ("partial PIK interest"). Cash interest on the Senior Toggle Notes accrues at six-
month LIBOR plus 4.5% per annum, and PIK interest, if any, accrues at six-month LIBOR plus 5.25% per annum. If the Company elects to pay
PIK interest or partial PIK interest, it will increase the principal amount of the Senior Toggle Notes or issue new Senior Toggle Notes in an
aggregate principal amount equal to the amount of PIK interest for the applicable interest payment period (rounded up to the nearest $1,000) to
holders of the Senior Toggle Notes on the relevant record date. The Senior Toggle Notes are treated as having been issued with original issue
discount for U.S. federal income tax purposes. Interest on the Senior Toggle Notes is payable semi-annually in arrears on March 15 and
September 15 of each year.
The Company may redeem some or all of the Senior Toggle Notes at any time at specified redemption prices. If the Company experiences
certain kinds of changes in control, it must offer to purchase the notes at 101% of par plus accrued interest to the purchase date.
The Senior Toggle Notes indenture contains certain limitations and restrictions on the Company's and the Company's restricted subsidiaries'
ability to incur additional debt beyond certain levels, pay dividends, redeem or repurchase the Company's stock or subordinated indebtedness
or make other distributions, dispose of assets, grant liens on assets, make investments or acquisitions, engage in mergers or consolidations,
enter into arrangements that restrict the Company's ability to pay dividends or grant liens, and engage in transactions with affiliates. In addition,
the Senior Toggle Notes indenture restricts the Company's and certain of the Company's subsidiaries' ability to declare or pay dividends to its
stockholders. 93