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NYSE: GNC market capitalization, stock price fail to meet listing standards

GNC Holdings Inc.
Supplements company has 45 days to present its plans to meet the standards, but a $441.5 million debt is due next month.

The New York Stock Exchange has warned GNC Holdings Inc. that its stock, company valuation and stockholder equity are all below the Exchange's listing standards, putting the stock at risk of being delisted.

GNC announced the notification via press release before the market opened Tuesday. The stock will continue to be listed on the Exchange for now, according to the press release.

NYSE requires companies maintain an average closing price of at least $1 for 30 consecutive trading days. In addition, the average market capitalization must be at least $50 million for the same time period or total stockholders' equity must be $50 million or higher.

According to the NYSE notice, GNC's 30-day average stock price as of April 21 was $0.56; its market capitalization average was about $47.3 million; and its stockholders' equity, when reported on Dec. 31, was negative $207.3 million, which illustrates that GNC's liabilities exceed its assets.

The Exchange's policy gives a company 45 days to present a plan for meeting the average share minimum, then six months to fulfill that plan. A company also has 45 days to submit a plan for increasing the market capitalization minimum, then 18 months to meet that minimum standard.

GNC "plans to timely notify the NYSE that it intends to present a plan" to meet both listing requirements, according to the press release.

However, the supplements company has debt of nearly $600 million, $441.5 million of which is due next month. GNC informed the Securities and Exchange Commission in mid-March that would not be able to pay that loan. In a conference call on March 25, Chief Financial Officer Tricia Tolivar announced that "certain lenders in Asia" would not refinance the debt.

GNC stock closed at $3.34 on Nov. 11, its 52-week high, and started the year at $2.76. After the declaration to the SEC, though, the stock price dropped to $0.50 on March 17 after closing at $1.08 on March 16. With the news that the attempt to refinance the debt had failed—and the temporary closing of numerous stores due to the COVID-19 pandemic—the stock fell to its 52-week low and closed at $0.39 on March 25.

One long-term investor, John Tang, and a group of individual shareholders have formed the GNC Shareholder Advocacy Group, Tang announced in mid-April. Tang told the Pittsburgh Post-Gazette that he owns 7.9% of outstanding GNC stock.

The group says that GNC "is in need of improvements in terms of corporate governance, manage and communications with the investor community," according to a press release.

The group's short-term goal is to "urge the board and management take any necessary action to resolver the short-term liquidity issues to avoid the bankruptcy filing." Group members want to discuss with the board and executives issues such as restructuring debt, selling the company, new strategies and initiatives, and selling the company.

Correction: Jun 12, 2020
The company's total debt was $600 million when this story was published; the original post was incorrect.
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