Empire Holdings and Investments, LLC,  the parent company of fitness brands TMPL, Palm Beach Sports Clubs and LIV, announced an agreement in principle for a $100 million commitment by Kennedy Lewis Investment Management LP. The company is a wholly-owned subsidiary of Town Sports International Holdings, Inc.

Town Sports sought Chapter 11 bankruptcy protection in September unable to keep up with debt payments after it was forced to shut its gyms for months to help stem the spread of COVID-19. Town Sports’ core properties include New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs, Lucille Roberts, Total Woman, and Around the Clock Fitness brands.

The $100 million commitment by Kennedy Lewis came through a senior secured first lien delayed draw term loan facility and an approximately 51 percent common stock investment, which is anticipated to be signed and consummated prior to year-end.

Patrick Walsh, CEO and chairman of the Board, commented, “We are excited to move forward with our long­standing partner, Kennedy Lewis. Kennedy Lewis recognizes the essential value of the fitness industry to our country and the material benefits of health and wellness for the American people. The health of our citizens is more important to our country’s success and survival than at any time in the last 100 years. Our company’s platform is uniquely positioned to restore and rebuild the fitness industry to the benefit of the American people and provide much-needed jobs to fitness industry professionals. I am excited to have Kennedy Lewis join the Board and enhance their partnership with me and our team. This investment will materially increase our financial strength and attest to investor confidence in our ability to weather this unprecedented crisis and rapidly rescale our operations. We look forward to executing definitive agreements and closing the investment shortly.”

David Chene, Kennedy Lewis co-managing partner commented: “We are proud to increase our investment and further our partnership with TMPL, Palm Beach Sports Clubs and LIV. The pandemic led disruption in the fitness industry is unprecedented and provided Kennedy Lewis with the opportunity to provide much-needed capital to an industry that is critical to the well-being of our country. We have tremendous confidence in Patrick Walsh and the Empire team and expect that their efforts to position the company to capitalize on opportunities presented by this disruption will further grow market share and deliver an even safer and more exceptional experience to our fitness members.”

Material Terms

  • Kennedy Lewis will receive approximately 51 percent of the company’s common stock as compensation for making the loan available to the company;
  • The Board will be increased to a total of five directors, with two current members retiring and three Kennedy Lewis appointees joining the Board; and
  • $100 million senior secured first lien delayed draw term loan facility with a 5-year maturity; the initial draw of $5 million with the remainder available upon satisfaction of certain conditions.

Photo courtesy Town Sports International