East Anglia: Gym chain LA fitness to press ahead with sale of clubs in Bury St Edmunds, Colchester, Cambridge and King’s Lynn
PUBLISHED: 12:23 25 March 2014 | UPDATED: 15:12 25 March 2014
Gym chain LA Fitness is to press ahead with a restructuring plan that will see it offload 33 clubs, including sites in Bury St Edmunds, Colchester, Cambridge and King’s Lynn, in a bid to slash debts by £250million.
A vote of creditors, including landlords, supported revised lease terms at a number of clubs under a Company Voluntary Arrangement (CVA).
It means the Doncaster-based firm can refocus on a smaller portfolio of 47 clubs and secure new lending facilities worth £40million.
Without creditor support for the CVA, business advisory firm Deloitte warned the company faced the threat of administration.
A marketing exercise has now been started and expressions of interest have been received for all 33 clubs that the group is selling.
Chief executive Martin Long said the moves would create a “leaner, more operationally efficient business” with the flexibility to continue investing in facilities, equipment and technology.
The company said the proposals will have no immediate impact on the day-to-day running of the business and that the clubs it plans to sell as part of the CVA will continue to operate as normal in the near-term.
Under the proposals, a total of 31 clubs and the group’s Doncaster head office have been retained at current rents, which will be paid monthly rather than quarterly for a period of two years.
A further seven clubs will be retained but with rent reduced to 60% of current levels. Nine clubs were not part of the CVA and will not be affected. The rent on the 33 clubs up for sale has been reduced to 45% of current levels for up to six months.
The company is owned by management and a number of banks, having been part of private equity firm MidOcean Partners since 2005.
It has 1,500 full and part-time employees, as well as a further 1,000 staff who work on contractual basis, such as class instructors.