Newspaper article The Journal (Newcastle, England)

Debt Swap to Make Group Fit for Rescue

Newspaper article The Journal (Newcastle, England)

Debt Swap to Make Group Fit for Rescue

Article excerpt

THE largest health club group in the world - Fitness First - is close to being rescued by a private investment fund as it buckles under a pounds 550m debt burden.

The gym chain, which employs 13,000 people and has 1.2 million members worldwide, is set to fall under the control of Oaktree Capital, it was reported yesterday.

Oaktree has reportedly been buying up the chain's debt and now owns more than a third.

It is in talks with Fitness First's private equity backers BC Partners over a debt-for-equity deal.

Fitness First has 430 clubs with 140 in the UK including one in Benton Road, Newcastle.

It recently warned that it was unlikely to make an pounds 18m interest payment due this month. A debt-for-equity swap will see Oaktree take a majority share, but it will allow BC Partners to keep part of its stake, which might lessen its losses in Fitness First.

BC Partners paid pounds 835m for Fitness First in 2005, which it has already mostly written off after the company racked up millions of pounds of debts. …

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