LA Fitness has announced it wants to sell 33 of its 80 clubs as part of a restructuring plan to help secure its long-term future.
This will enable the business to focus on a smaller portfolio and significantly reduce its debt burden, with more attention being paid to its remaining 47 facilities.
The company has also proposed landlord Company Voluntary Arrangements (CVAs). If these are approved, revisions on lease terms will be made at a number of its clubs to pave the way for the implementation of an agreed restructuring package.
If the process goes ahead, the business will reduce its debt burden by around £250m, while helping to put into place new term loan facilities. It is proposed that Deloitte will supervise the CVAs.
“LA fitness is a strong brand that is valued by its members. We have had a good start to 2014 and our membership numbers are up year-on-year,” said Martin Long, CEO of LA fitness.
“It is a structural issue that is hampering LA fitness and through this sales process we will create a leaner, more operationally efficient business, with a long-term, sustainable future as one of the UK's leading health and fitness operators.
“Importantly, we will have the financial strength and operational flexibility to continue investing in facilities, equipment and technology across our retained portfolio of clubs to enhance the experience for our members.”
The business has said that the proposals will have no immediate impact on the day-to-day running of the business for members, employees, suppliers or trade partners.
It also states that the clubs being sold as part of the CVA proposals will continue to operate as normal in the near-term future, with every effort being made to ensure that members are unaffected.
It is also expected that the majority of the existing employees will continue to be employed under a TUPE structure by the new owners.
LA Fitness opened its first new club in 10 years with the LAX club in October 2013, which CEO Martin Long called in the January issue of
Health Club Management magazine as a “clean sheet of paper.” Long
also hinted following the launch that the brand could be about to move into the microgym sector. Details: http://lei.sr?a=y6R8h
