F45 Training Holdings, Inc. reported closing a new $90 million subordinated debt facility provided by a consortium of existing investors led by affiliates of Kennedy Lewis Management LP to improve the company’s balance sheet and liquidity.
“The financing transaction, combined with our recently implemented operational realignment and cost reduction initiative, enables us to increase the support we provide our valued franchisee network and continue to deliver on our mission of offering the world’s best workout,” said Ben Coates, F45’s interim CEO. “We are glad to have secured this significant financing from investors who share our vision.”
Darren Richman, co-founder, co-portfolio manager, and co-managing partner of Kennedy Lewis, added, “We’re pleased to deepen our partnership with F45, an innovator with a differentiated brand that is uniquely positioned to capitalize on the growing trend of consumers prioritizing health and fitness in their daily lives. As long-time investors in F45, we have a deep understanding of, and continued confidence in, the business and the opportunity ahead for F45 as a disruptor in the fitness space.”
Board Director Appointments
In connection with the closing of the transaction, current board member Gene Davis, with more than four decades of strategic planning, business transformation and governance expertise, was appointed chairman, along with four new independent directors who were appointed to the board, including Timothy Bernlohr, Lisa Gavales, Steven Scheiwe, and Ray Wallander.
The new directors, who bring a wealth of management and consumer sector experience, replace Angelo Demasi, Vanessa Douglas and Lee Wallace, who resigned at closing.
Ben Coates, Adam Gilchrist, Elizabeth Josefsberg, and Michael Raymond, F45 investor and brand ambassador Mark Wahlberg, remain on the Board with Davis.
The company named Bob Madore as interim CFO, with more than 30 years of management experience and a record of growing brands in global markets, as well as leading and scaling financial operations while strengthening business performance. Before joining F45, Madore was the CFO of Ralph Lauren, American Eagle Outfitters, and, most recently, The Cronos Group.
Transaction Details
The New Facility has a five-and-a-half-year term, with interest to be paid in kind. Net proceeds will be used for, among other things, general corporate purposes and a partial pay-down of the company’s existing Senior Secured Revolving Credit Facility with JP Morgan Chase Bank, N.A. (JPM Facility).
Concurrent with the closing of the New Facility and the partial pay-down, the company amended the JPM Facility to be structured as a $70 million senior secured facility with a two-year term, comprising a $68 million term loan and a $2 million revolving credit facility.
Gibson, Dunn & Crutcher LLP served as legal counsel to F45 on the transaction. Jefferies LLC acted as financial advisor, and Akin Gump Strauss Hauer & Feld LLP served as legal counsel to Kennedy Lewis.
Strategic Alternatives Update
As an update to the previously announced formation of a Special Committee to review and evaluate the unsolicited proposal F45 received from Kennedy Lewis and other strategic alternatives, the Special Committee paused its review and evaluation as the Board focused on securing financing to address F45’s liquidity needs.
The company has not received anything further from Kennedy Lewis regarding its prior proposal or a revised one. If Kennedy Lewis engages with the company on its proposal, including any revision thereof, the Board would consider the proposal at the appropriate time and act in the company’s and its shareholders’ best interests in accordance with its fiduciary duties.
The company does not undertake any obligation to provide any updates concerning a review of strategic alternatives or any other transaction except as required under applicable law.
The fitness franchise has over 1,750 studios in 45 countries across Australia/Oceania, North America, South America, Asia, Europe and Africa.
