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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. |
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