GNC Holdings Inc. announced on Wednesday that it has received the final $150 million of Harbin Pharmaceutical Group’s $300 million investment that stockholders approved last May.
With the third payment, the two companies are forming a Hong Kong-based e-commerce joint venture that will sell GNC-branded supplements in China. Harbin Pharmaceutical, which operates as Hayao, will make and market the products.
GNC announced a year ago that Hayao planned to invest in the company, and the two companies announced on Nov. 7 that they had reached an agreement for the funding. Previous investments of $100 million and $50 million were made on Nov. 8 and Jan. 2, respectively.
Under the agreement, Hayao designated two directors to GNC’s board in November and three more in January, joining five GNC members and CEO Ken Martindale. Hayao is now GNC’s largest shareholder with about 40 percent of the company’s stock.
The formation of the Hong Kong-based China e-commerce joint venture represents the first and most significant step towards the completion of the China joint venture, according GNC’s press release. The parties expect to complete the formation of the second, retail-focused joint venture in the second or third quarter of 2019. Hayao owns a pharmaceutical distribution network in China through which GNC products will be available to retailers.
The influx of cash will help GNC pay down its $1.8 billion debt; a $1.1 billion loan was due in March, but the company and its financiers agreed to change the due date to March 2021.
During an earnings call in November, GNC executives said third-quarter revenue for fiscal 2018 fell to $580.2 million, a 5.3 percent drop from the third quarter of fiscal 2017. The company’s third quarter ended Sept. 30.
The fourth-quarter and year-end earning call is scheduled for March 7.
Source: GNC Holdings Inc.