S&P Global Ratings assigned its ‘B’ issue-level and ‘1’ recovery ratings to U.S.-based owner and operator of fitness clubs Life Time Inc.’s proposed $475 million revolving credit facility due December 2026 or 91 days prior to the December 2024 maturity on the company’s term loan if the facility is still outstanding.
The ‘1’ recovery rating indicates S&P’s expectation for very high (90 percent to 100 percent; rounded estimate: 95 percent) recovery for lenders in the event of a payment default.
S&P said, “Life Time (CCC+/Stable) is refinancing its existing $325.25 million revolving credit facility due 2024 with the proposed facility to extend the maturity and increase its liquidity position for operating needs, including planned club development. We affirmed our ‘CCC+’ issue-level rating on the company’s $475 million senior unsecured notes due 2026 and revised the recovery rating to ‘4’ from ‘3’. The revised recovery rating reflects lower recovery coverage for unsecured lenders given the higher secured debt with the revolver upsize. Our hypothetical default scenario for recovery analysis includes the assumption that the revolver is 85 percent drawn at the time of default. The ‘4’ recovery rating indicates our expectation for average (30 percent-50 percent; rounded estimate: 35 percent) recovery for lenders in the event of a payment default.”