Fitness Company Trims Down Interest Cost

24 Hour Fitness Worldwide will save $23 million annually by using add-on term debt and free cash flow to pay off more costly senior and junior subordinated notes.

  • 03 Dec 2004
Email a colleague
Request a PDF

24 Hour Fitness Worldwide will save $23 million annually by using add-on term debt and free cash flow to pay off more costly senior and junior subordinated notes. "If you look at the interest savings it was clearly a no-brainer decision," noted Colin Heggie, the fitness company's cfo. Incumbent lead arranger J.P. Morgan is leading the add-on term loan, which is only being offered to existing lenders.

The complicated and costlier debt structure was put together in 1999 with many differing layers of debt, Heggie explained. The major equity investor, McCown De Leeuw & Co., did a financial rollup of three separate funds--its US business, European business and Asia business--and put the three of them together to create what is now 24 Hour Fitness Worldwide, he noted. "At that particular time the capital structure they created would have been classified as interesting," he said. Within that structure was $120 million of 14 1/4% senior subordinated notes and $68.3 million of 20% PIK junior subordinated notes.

The company will tack $130 million onto its $275 million term loan. It also has an undrawn $75 million revolver. Pricing is expected to stay the same, noted Patrick Flanagan, 24 Hour Fitness' assistant treasurer, but he declined to disclose the spread. The credit is reportedly priced at LIBOR plus 3 1/2%. In addition to the bank debt, $66 million of excess free cash flow is being used to pay down the total debt. "We're continuing to deleverage the business," Heggie said.

  • 03 Dec 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 358,291.38 1348 9.06%
2 JPMorgan 320,704.66 1461 8.11%
3 Bank of America Merrill Lynch 318,128.31 1104 8.04%
4 Goldman Sachs 236,643.87 789 5.98%
5 Barclays 231,197.41 895 5.84%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 35,007.57 165 6.53%
2 Deutsche Bank 34,880.53 120 6.51%
3 Bank of America Merrill Lynch 31,805.65 97 5.93%
4 BNP Paribas 27,920.60 169 5.21%
5 SG Corporate & Investment Banking 24,398.89 138 4.55%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 19,745.92 80 8.85%
2 Morgan Stanley 16,334.63 83 7.32%
3 Citi 15,972.34 95 7.16%
4 UBS 15,487.17 60 6.94%
5 Goldman Sachs 14,053.61 76 6.30%