Wed, 12 Mar 2014 | DIVISION SALE
LA Fitness is going to sell almost half of its gyms in a bid to secure the company’s long-term future amid problems of debt and fierce competition.
The chain of gyms announced last week that it plans to downsize the number of branches it operates from 80 to 47. This core portfolio of locations will, the company hopes, enable it to remain financially strong and flexible in the future.
As well as the initiation of a sale process, the group has proposed landlord Company Voluntary Arrangements (CVAs). If approved, the CVAs will revise lease terms at a number of its clubs and pave the way for the implementation of an agreed restructuring package that will reduce LA Fitness' debt burden by around £250 million and put in place new term loan facilities. If not, the business risks entering administration.
In the near term, the company said that there would be no impact on members, employees, suppliers or trade partners. LA Fitness hopes that even those members and staff at branches that are due to sold will be unaffected.
In a statement by the company, LA Fitness CEO Martin Long said that the brand remains strong and member numbers continue to grow each year. “It is,” he explained, “a structural issue that is hampering LA fitness and it is through this process that 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.”
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