Fitness First seals deal on debt with lenders

The largest health club group in the world - Fitness First - is close to securing its future after it unveiled a debt deal with its lenders.

The gym chain, which employs 13,000 people and has 1.2 million members worldwide, yesterday said more than 90 per cent of its lenders have signed an agreement agreeing to the terms of a company turnaround plan.

The agreement will see the lenders convert their debt into shares in the business once the restructuring programme is completed, as well as providing significant long-term funding.

Fitness First, which has 430 clubs, including 140 in the UK, recently warned that it was struggling to meet its costs as it buckled under a £500m-plus debt mountain.

The company said the combination of having no debts and committed support from its lenders will bring long-term financial security.

Chief executive Chris Stone said: “This is an important milestone in our strategy to put in place a financial structure that will allow Fitness First to prosper in the future.”

Fitness First, along with rival LA Fitness, has found revenues squeezed in recent months because consumers are spending less and budget gym operators are growing.

The chain was paying £144m in annual interest on its borrowings on revenues of £636m.