S&P Global Ratings downgraded the debt ratings of Equinox Holdings, Inc. after the New York-based fitness club operator closed on an amendment to its first-lien credit agreement.
The amendment extends the maturity of its fully drawn $76 million revolving credit facility to November 2023 from March 2023. The company also paid down $5 million of the facility, transitioned the interest to a Secured Overnight Financing Rate-based rate from LIBOR, decreased its required minimum liquidity to $12.5 million from $17.5 million on its first-lien credit facility.
S&P said, “We consider this amendment to be distressed and tantamount to a default given the company’s weak liquidity position, ongoing cash burn, and our belief that lenders likely did not receive adequate offsetting compensation. Therefore, we lowered our issuer credit rating on Equinox to ‘SD’ (selective default) from ‘CCC-‘. At the same time, we lowered our issue-level rating on the revolving credit facility to ‘D’ from ‘CCC-‘.
S&P also said it plans on raising its issuer credit rating on Equinox as soon as practical, likely in the next several days, to a level that reflects the ongoing risk of selective or conventional default.
Equinox Holdings operates lifestyle fitness brands, including Equinox, Equinox Hotels, Precision Run, Project by Equinox, Equinox Explore, Equinox Media, Furthermore, Pure Yoga, Blink Fitness, and SoulCycle.
Photo courtesy Equinox
