24 Hour Fitness Engages With Suitors Before Planned Bankruptcy
(Bloomberg) -- 24 Hour Fitness Worldwide Inc. is in discussions with suitors as it seeks a potential buyer to serve as a stalking horse in a court-supervised bankruptcy process, according to people with knowledge of the matter.
The operator of more than 430 gyms is working with an adviser to solicit potential bidders ahead of a planned bankruptcy filing, said the people, who requested anonymity because the talks are private.
“24 Hour Fitness is productively engaged with its creditors to explore strategic options and ensure the company is well positioned to serve its members nationwide for the long-term,” the San Ramon, California-based company said in a statement sent to Bloomberg.
24 Hour Fitness-- which has felt the brunt of nationwide shutdowns to curb the spread of Covid-19 -- skipped a June 1 interest payment on its unsecured bonds due 2022, Bloomberg reported earlier this week.As it works out its borrowings, the fitness chain also started reopening certain locations in Texas under state and federal guidelines.
The contemplated sale process of the company is one option 24 Hour is weighing as part of its restructuring efforts, one of the people said. A stalking horse typically sets a floor for bidders looking to buy assets of a company in a bankruptcy restructuring.
The company, which has more than $1.3 billion of debt stemming from a leveraged buyout by AEA Investors and the Ontario Teachers' Pension Plan in 2014, had been in negotiations with creditors to rework its debt load. Those talks ended in a stalemate around the time of mandated gym closures, it said in a private earnings report in March.
The company's bonds due 2022 last traded on May 12 at 3 cents on the dollar, according to Trace data.
©2020 Bloomberg L.P.
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