HACKENSACK, N.J., April 21, 2020 /PRNewswire/ -- Tang PC
investigates GNC's Board of Directors and Management for Possible
Fraud and Breach of Fiduciary Duty
Tang PC, a laws firm based in New
York and New Jersey
announces the investigation of the Board of Directors ("Board") and
the senior management ("Management") of GNC Holdings, Inc. (NYSE:
GNC) for allegations including, but not limited to fraud and breach
of fiduciary duty.
John Tang, Esq., the principal of
Tang PC, is a long-term investor with a significant holding of
7.88% of outstanding GNC Holdings, Inc. (NYSE: GNC) class A
common stock. John Tang, in concert
with a group of individual GNC shareholders across the world, has
recently established the GNC Shareholder Advocacy Group ("SAG") to
protect and promote the shareholder's interest.
The SAG and Tang PC have received material information and
extremely disturbing allegations from multiple credible sources
that warrants the aforementioned investigation. Tang PC will
investigate the allegations including, but not limited to:
- GNC's Board and Management are not pursuing any readily
available options to address the short-term liquidity issue due in
May 2020 caused by the coronavirus
pandemic as claimed by the Management, and instead are actively
working with the lenders on the avoidable bankruptcy filing.
- GNC's Board and Management colludes with the GNC creditors to
defraud the shareholders for the purposes of self-enrichment by
orderly and gradually sinking GNC into bankruptcy and into the
hands of GNC creditors at the minimum cost.
- GNC's Board and Management deliberately rejected several tender
offers in the past few years to serve towards the GNC creditors'
ultimate goal of stealing the company at the expenses of the
shareholders.
- GNC's Management has purposefully not restructured the
long-term debt in the best interest of the Company and engineered
several default risks in the past few years to facilitate the
seemingly inevitable bankruptcy filing in the interest of GNC
creditors
- GNC's Management conspires with the GNC creditors to drive down
the stock price so that crumbles, if any, to the shareholders from
the bankruptcy proceeding constitutes a premium.
- GNC's Board and Management's clear Breach of fiduciary duty
owed to the shareholders on the grounds of their numerous actions
on record.
GNC's Board and Management are not responsive to Tang PC's
letter dated April 19, 2020 that
sought their response to those allegations. Tang PC is compelled to
instigate the investigation immediately and may expand the scope of
the investigation to include other related parties.
Due to the imminent nature of the alleged bankruptcy filing and
foreseeable irreparable damages to the shareholders, the
shareholders have authorized Tang PC to promptly initiate the
lawsuit against the Board, Management and other parties, seeking
injunctive and other reliefs.
Tang PC Proposes the Public Sale of GNC
Tang PC, on behalf of the shareholders, proposes the sale of GNC
on the grounds as follows:
GNC's true and fair value can only be determined and unlocked by
the public sale. GNC is a leading global powerhouse of health and
nutritional products with revenue of $2.07
billion, EBITDA of $191.8
million and net cash flow of $96.5
million in 2019. GNC has approximately $100 million in cash, $45
million receivable from IVC and $871.2 million in debt as of today. In the
United States, the average value of enterprise value to EBITDA
(EV/EBITDA) in the retail and trade sector as of 2020 was a
multiple of approximately 13.4x, 22.8x for online retail. A more
conservative multiple of 10 would still give GNC an enterprise
value of $1.918 billion and a net
value of $1.19 billion after cash and
debt, not counting China joint
venture. By contrast GNC's current market capitalization is less
than $35 million.
GNC has never been offered for sale but nevertheless has seen
several attempts of acquisition in the past. A public sale of
GNC could attract companies like P&G (PG), Nestle (NSRGY),
Hershey's (HSY), Amazon (AMZN) and other health/nutritional
products companies domestic or international. The right buyer has
the opportunity to acquire GNC at a low price, financing through
the issuance of low yield bond or low interest loan.
The public sale is the only way to protect the shareholders from
the possible collusion of the insiders, including the Board and
Management, the creditors and CITIC/Harbin Pharmaceutical.
CITIC/Harbin completed the
$300 million investment for preferred
stock to be converted to 40% of GNC common stock at $5.35/share. Currently CITIC/Harbin has 5 directors. A backroom deal
will embolden the Board and Management to push for the unnecessary
bankruptcy. The insiders will reap all the benefits of the
bankruptcy, wiping out or greatly diluting the shareholders' stake.
As the result, the insiders would own the debt-free GNC for less
than $1 billion.
The public sale is warranted by the complete loss of confidence
in the Board and Management. There shall be no doubt that this
Board and Management do not serve the best interest of the
shareholders. GNC's stock performance may not reflect the true
value of GNC but it does indicate the ineptness of the Board and
Management. Despite the mismanagement of GNC and constant injection
of uncertainty and confusion in the market by the surprising,
misleading and conflicting press releases one after another, the
Board and Management rewarded themselves with $250K compensation to the directors and multiple
million compensation to the Management when the GNC stock becomes
penny stock and the employees earn minimum wages.
Tang PC (www.gettang.com) is a law firm committed to providing
premium legal services to clients across the world. GNC SAG is a
shareholder advocacy group organized by John Tang, Esq.
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SOURCE Tang PC
