SCOTTISH entrepreneur Duncan Bannatyne has struck a £92 million sale and leaseback deal that has almost wiped out debts at his healthclubs empire.
The agreement with M&G Investments covers 39 Bannatyne’s Health Clubs and will clear its loans with the failed Anglo Irish Bank. According to the latest accounts for the company for 2012, its outstanding bank loans stood at £127.1m by the end of the year.
The deal involves the sale of land and buildings in exchange for 125-year ground lease agreements.
Bannatyne, chairman of Bannatyne Group, said: “M&G can see the long-term value of our business and has agreed to be our landlord over a very long lease term.
“Our premium business is successful, sustainable and profitable and we believe it is an ideal tenant to provide M&G’s investors with reliable returns.”
Nigel Armstrong, chief executive of Bannatyne Group, said the transaction enabled the business to be “virtually debt free”.
“It will greatly benefit the liquidity of the business, at the same time allowing us to continue to fully control the operation and management of all the health clubs. Coupled with the ongoing profits from the business, which have climbed this year, the business has emerged from the economic storm stronger than ever.”
Ben Jones of M&G Investments, which manages money on behalf of many pension funds, said the deal was notable as it replaced existing bank funding.
Latest figures show that Bannatyne Fitness returned to growth in its last financial year, with pre-tax profits increasing to £8.7m in 2012 from £7.8m.
Turnover edged up to £89.5m from £89.1m. Net assets rose to £40.9m from £37.3m.
With more than 60 sites across the UK under the Bannatyne’s Health Clubs brand, the company has around 170,000 members and employs in the region of 5,000 people.
Bannatyne Group will announce its annual results in March and said operating profits were expected to exceed £10m.