UK gym chain Fitness First plans to sell 50 of its lossmaking clubs following a debt for equity exchange involving Oaktree Capital and Marathon Asset Management.
Distressed debt funds Marathon and Oaktree, Fitness First’s largest lenders, have agreed to write off around £565m (US$915m) of the gym chain’s debt in exchange for equity. The precise size of Marathon and Oaktree’s equity stake has not yet been decided.
Fitness First’s private equity owner BC Capital Partners could lose its entire stake in the company under the debt restructuring.
Fitness First’s lenders are also in talks regarding a potential £100m capital injection. BC Partners’ ultimate stake in Fitness First will probably be determined by the amount of cash it is willing to inject.