Fitness First kept afloat as CVA move is approved
FITNESS First, the world’s largest gym chain, was thrown a lifeline yesterday as creditors waved through a last-ditch bid to tackle its burgeoning debt pile.
The firm – which employs around 13,000 people, including 1,500 in the UK – secured backing for a company voluntary arrangement (CVA) that will allow an overhaul of the chain’s leases to go ahead.
The restructuring will see 67 of the company’s gyms transferred to other operators within the next six months and, in the meantime, rent on these gyms will be reduced. The remaining 79 clubs will continue to operate under the Fitness First brand.
Accountancy firm KPMG, which supervised the CVA, said the majority of the group’s landlords voted in favour of the proposals, which will give returns of between 25p and 35p in the pound, compared to less than 1p if the company had gone into administration.
Andy Cosslett, Fitness First chief executive, said: “The strong support for the CVA by our landlords is a critical step in the restructuring of Fitness First. We will have a well financed balance sheet and a profitable portfolio of clubs worldwide.”
He added: “We are now drawing up plans to increase investment in our existing clubs, increase the number of markets in which we operate and increase our levels of service and innovation for the benefit of our million plus members worldwide.”
Approval of the CVA will also see lenders convert their debt into shares in the business once the restructuring programme is completed.
Fitness First, which has 430 clubs worldwide, recently warned it was struggling to meet its costs as it buckled under a £400 million debt mountain.
The chain has found revenues squeezed in recent months because consumers are spending less and budget gym operators are growing.
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