24 Hour Fitness, which filed for bankruptcy in June, announced that it has entered into a restructuring support agreement (RSA) with lenders beneficially holding approximately 73 percent of the company’s secured debt and approximately 65 percent of the company’s senior unsecured notes on the terms of a comprehensive restructuring plan.
The RSA sets forth terms for a financial restructuring that will reduce approximately $1.2 billion dollars of funded debt, provide increased financial flexibility to help navigate through COVID-19, and better position 24 Hour Fitness for long-term success.
24 Hour Fitness said it is continuing to reopen clubs and welcome members and guests in locations nationwide as allowed by state and local governments. During this process, the health and safety of 24 Hour Fitness team members, club members, guests, and club communities remain a top priority. All club members will continue to have access to any available 24 Hour Fitness club, regardless of membership level, through the end of 2020.
“We have made tremendous progress in repositioning 24 Hour Fitness for long-term success,” said Chief Executive Officer Tony Ueber. “The restructuring has allowed us to take steps to right-size our cost structure and real estate footprint. We have reopened a large portion of our clubs based on state and local guidelines and welcomed back many of our team members. We are pleased to have the support of our lenders and are excited to continue implementing our transformation plan, including continuing to invest in the technologies and experiences that make our club communities so vibrant. I remain highly optimistic about our future.”
On June 15, the company voluntarily filed for relief under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The company secured approximately $250 million in new-money debtor-in-possession (DIP) financing.
Ueber continued, “The club community is a vital part of the 24 Hour Fitness in-club experience. We are pleased that our members have enthusiastically returned to their clubs and that they appreciate our stringent health and safety protocols. Our primary goal is to help people change their lives through fitness every day. I want to thank our team members for bringing our mission to life with such passion and thank our club members for their continued support during this time.”
Lazard is acting as investment banker, FTI Consulting is acting as restructuring advisor, and Weil, Gotshal & Manges LLP is acting as the company’s legal counsel in connection with the company’s Chapter 11 cases. For more information, go here.
Photo courtesy 24 Hour Fitness