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Fitness First in debt deal

23 April 2012

According to reports in the Telegraph, Fitness First has struck a deal with its lenders over its £560m debt.  The lenders have signed a waiver over its quarterly interest rate bill of £18m but the shareholders will receive nothing and the company will be controlled by its lenders.  Oaktree and Marathon have acquired 77pc of the company's debt for an estimated 55p in the pound.  However it is understood that in order for them to inject the £100m into the company to keep in going there will need to be a radical restructuring of the business which will result in the closure of gyms and redundancies.  A company voluntary arrangement has not been ruled out as a way of achieving this. 

It is estimated that a third of the  gyms are not profitable.  A CVA will enable the firm to vacate these premises and any past or future lease obligations being bound by the arrangement.  However it will need the support of their landlords if they are a major creditor for the firm.  However, of course, the first option is to try and renegotiate the rent with the landlords as they will not want to see gyms close.

So our advice is if you have difficulty paying the rent then talk to your landlord!