24 Hour Fitness in talks with bidders ahead of bankruptcy
The mid-tier gym chain was struggling before the pandemic set in
24 Hour Fitness is in talks with entities to find a stalking horse bidder ahead of a court-supervised bankruptcy.
The mid-tier fitness chain, which operates more than 430 gyms, is seeking the stalking horse bidder before it files for bankruptcy, Bloomberg reported. The possible Chapter 11 filing would cut the company’s debt and put lenders in control. Investment bankers at Lazard and attorneys at Weil, Gotshal & Manges are advising the gym on the process.
“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,” a spokesperson for the gym operator wrote to Bloomberg.
Gyms were hit hard by the pandemic — New York Sports Club is also considering filing for bankruptcy, and a market research firm estimated that the fitness industry could shrink from an $85 billion industry to a $45 billion industry this year.
But 24 Hour Fitness’ troubles predate the widespread stay-at-home orders and social distancing. Last year, it reported a 2 percent decline in revenue in its unaudited fourth-quarter earnings report, and membership dropped from 3.5 million to 3.4 million from the second to third quarter last year.
The company was also saddled with $1.3 billion after a leveraged buyout in 2014 by AEA Investors and a Canadian pension fund. Talks to restructure that debt load failed in March, just as the pandemic set in. [Bloomberg] — Georgia Kromrei