Country's biggest gym company set to shed nearly half its sites as it attempts to avoid falling into administration
The country's biggest gym company, Fitness First, is set to shed nearly half its sites as it attempts to avoid falling into administration, with Sir Stelios Haji-Ioannou's no-frills easyGym expected to be one of the biggest beneficiaries.
The struggling business, which has around 10,000 employees worldwide, has proposed a company voluntary arrangement (CVA) with its creditors, mainly its 120 landlords, to shrink its �560m debt.
Richard Fleming, UK head of restructuring for accountants KPMG, which is organising the deal for Fitness First, said: "We estimate that the return to compromised landlords to be within a range of 23-28p in the pound, versus less than 0.5p in the pound in administration."
A source close to the gym said a number of companies have expressed interest in the 67 sites that will be transferred to rivals over the next six months and it is thought the easyJet founder has been in discussions for the last few weeks.
Sir Stelios opened his first pay-as-you-go gyms in north London and Slough last year and wants to expand.
Fitness First's biggest lenders, investment houses Oaktree Capital and Marathon, have already agreed to write off more than �560m of debt in return for an undisclosed equity stake in the company.
The company, which is owned by private equity firm BC Partners, has struggled recently to meet spiralling interest bills after it was loaded with debt following a series of acquisitions.
Bosses had hoped to float the business in Singapore last year, but this was ditched and plans to sell failed.
Landlords and unsecured creditors will vote on the proposed CVA, which must offer a bigger return than administration, later this month.
Other plans include 57 gyms paying rents monthly rather than quarterly and five sites paying rent at a 65% discount. Another 18 gyms will be unaffected and the 67 set to go to rivals will get a 55% rent reduction until the transfers are completed.
Source: http://www.guardian.co.uk/business/2012/jun/01/fitness-first-selloff-rivals
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