Partner Article

Fitness First given CVA reprieve

Struggling gym chain Fitness First have been thrown a lifeline through a proposed company voluntary agreement (CVA).

It is hoped that the CVA will help the firm to avoid administration, and will involve a re-negotiation of the terms of its property portfolio and a £100 million loan injection. The firms creditors have yet to approve the deal.

There are about 140 Fitness First gyms around the UK, but they have struggled to keep up with rental payments after a fall in membership revenues.

Oaktree Capital and Marathon are two of Fitness First’s biggest lenders, and both have agreed to write off more than £560 million of debt in return for an undisclosed equity stake in the comapny.

It is now hoped that the CVA will offer a better return to creditors than an administration and should not be used as a way of escaping onerous leases

Richard Fleming, KPMG’s UK head of restructuring, said: “In the case of Fitness First, we estimate that the return to compromised landlords to be within a range of 23-28p in the £1 versus less than 0.5p in the £1 in administration.”

Under the terms of the CVA, all Fitness First currently-trading gyms will remain open, but 67 will be offloaded to new operators within the next six months.
Fitness First is owned by private equity firm BC Partners.

This was posted in Bdaily's Members' News section by Ruth Mitchell .