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Fitness First thrown CVA lifeline Fitness First thrown CVA lifeline
(about 4 hours later)
Struggling gym company Fitness First has proposed a company voluntary arrangement (CVA) in a bid to avoid going into administration.Struggling gym company Fitness First has proposed a company voluntary arrangement (CVA) in a bid to avoid going into administration.
The move, to be administered by KPMG, will involve a renegotiation of the terms of its property portfolio and a £100m loan injection.The move, to be administered by KPMG, will involve a renegotiation of the terms of its property portfolio and a £100m loan injection.
But it has to be approved by the firm's creditors first.But it has to be approved by the firm's creditors first.
Separately, independent camera retailer Cecil Jacobs has been placed into administration.
The Leicester-based company employs 154 staff and operates 19 stores in the UK.
Administrators PKF said: "Our plan is to keep the business running in the short term and undertake an immediate review of the company's estate, with a view to finding a buyer, if possible, for the going concern."
Debt write-off
Fitness First has about 140 gyms and is struggling to keep up rental payments after a fall in membership revenues.Fitness First has about 140 gyms and is struggling to keep up rental payments after a fall in membership revenues.
Two of Fitness First's biggest lenders, Oaktree Capital and Marathon, have already agreed to write off more than £560m of debt in return for an undisclosed equity stake in the company.Two of Fitness First's biggest lenders, Oaktree Capital and Marathon, have already agreed to write off more than £560m of debt in return for an undisclosed equity stake in the company.
According to KPMG, a CVA must offer a better return to creditors than an administration and cannot simply be used to escape onerous leases.According to KPMG, a CVA must offer a better return to creditors than an administration and cannot simply be used to escape onerous leases.
Richard Fleming, KPMG's UK head of restructuring, said: "In the case of Fitness First, we estimate that the return to compromised landlords to be within a range of 23-28p in the £1 versus less than 0.5p in the £1 in administration."Richard Fleming, KPMG's UK head of restructuring, said: "In the case of Fitness First, we estimate that the return to compromised landlords to be within a range of 23-28p in the £1 versus less than 0.5p in the £1 in administration."
Under the terms of the CVA, all Fitness First currently-trading gyms will remain open, but 67 will be offloaded to new operators within the next six months.Under the terms of the CVA, all Fitness First currently-trading gyms will remain open, but 67 will be offloaded to new operators within the next six months.
Fitness First is owned by private equity firm BC Partners.Fitness First is owned by private equity firm BC Partners.