Fitness First In Better Shape After Debt Deal
Debt-laden Fitness First is set to confirm a deal that will ensure its survival but at significant cost to its private equity owner.
Under the agreement with lenders, it is understood that the global leisure chain's debts of more than £600m will be wiped out, leaving BC Partners with a much reduced holding.
Two funds, which had snapped up almost 80% of Fitness First's debt pile, will effectively take control of the business under the plan.
Oaktree and Marathon have reportedly agreed to inject £100m to help restore the company's fortunes and guarantee its immediate future.
However, a restructuring that could be demanded by the funds could result in some of its 140 UK gyms being closed and job losses among the 1,000 staff.
The Daily Telegraph reported that while Fitness First's chief executive Chris Stone had agreed a three month waiver agreement on its £18m quarterly rent bill, gym closures were more likely if lower terms could not be negotiated.
It also reported that a company voluntary arrangement (CVA) had not been ruled out as a potential move to eliminate heavy rent costs.
Fitness First, like many leisure companies, has been hurt by the squeeze on consumer spending of the past few years.
A third of properties in its UK portfolio are understood to be unprofitable.
It employs 13,000 staff at 430 gyms worldwide.