(Yicai Global) June 22 -- Harbin Pharmaceutical Group has not received a CNY171 million (USD24.2 million) dividend payment from GNC Holdings that was due on March 31, as the US vitamin and supplements retailer has been badly affected by the Covid-19 pandemic.

Pittsburg-based GNC may also default on a dividend due on June 30, the Chinese company said yesterday, without saying whether its USD300 million investment in GNC’s convertible preferred shares was at risk.

Harbin Pharmaceutical bought the 6.5 percent-yielding shares, which would give it a 40 percent stake in GNC if converted, in 2018. There were also plans to set up a joint venture with the exclusive right to distribute GNC products in the Chinese mainland, the firm said at the time.

But with the onset of Covid-19, GNC was forced to temporarily close 1,300 stores in the US and Canada, around 40 percent of its outlets, some of which may never reopen. That has weighed heavy on performance, Harbin Pharmaceutical said.

The drugmaker has now lost half of its initial investment in GNC, worth CNY1.2 billion (USD169.6 million) due to changes in fair value, it added.

GNC is considering all possible ways to resolve its debt repayment crisis, including applying for Chapter 11 bankruptcy, also known as rehabilitation bankruptcy, which allows the firm to try to get back on its feet, Harbin Pharmaceutical said.

Harbin Pharmaceutical [SHA:600664] closed down 2.3 percent today at CNY3.48 (USD0.49). GNC [NYSE:GNC] ended last week at USD0.89, down 2.6 percent.

Editor: Kim Taylor