LA Fitness to sell 33 gym chains after landlords back rescue deal
LANDLORDS to gym chain LA Fitness have backed a controversial deal allowing the loss-making group to offload nearly half of its clubs and slash its rental bill.
LA said yesterday that 33 of its 80 clubs will be put up for sale over the next six months after a company voluntary arrangement (CVA) was supported by more than 90 per cent of its landlords.
Under the terms of the deal, landlords to seven of its clubs have agreed to a 60 per cent rent cut. Its remaining 31 stores will stay at current rents, with LA allowed to pay on a monthly rather than quarterly basis.
The group, which was bought by private equity group MidOcean Partners in 2005, has faced growing competition from budget gym chains such as Gym Group and Pure Gym, and has been weighed down by its huge £250m debt-pile.
A part of the restructuring, the chain will now be taken over by its lenders led by the Royal Bank of Scotland in a debt-for-equity swap that will help cut LA’s debt and also put a new loan facility in place.