J.P. Morgan and Credit Suisse First Boston's repricing for 24 Hour Fitness Worldwide raised some investor eyebrows last week. The loan was previously at LIBOR plus 41/4%, but the two banks have set a target of LIBOR plus 31/2% for the $275 million term loan "B," said sources. The five-year, $65 million revolver is being offered at LIBOR plus 31/2% with a 50 basis points commitment fee. The bank meeting was held last Tuesday.
"I'm not sure it will get done at this price. It never traded that well," said one investor. But another said in this market the pricing for the B/B1-issuer should not be a problem. The debt to free cash flow less capital expenditures is projected to be around 9.8 times for 24 Hour, which is the second largest fitness company in the U.S. (see Credit In Focus, page 8). Colin Heggie, 24 Hour Fitness' cfo, did not provide comment by press time. A J.P. Morgan spokesman and a CSFB banker did not return calls.