An auction to sell a strip of Virgin Active’s term loan, RCF and working capital facility for a blended price in the mid-70s has been postponed until later this week, sources told Reorg. The auction was initially due to take place today.
Lloyds Banking Group is one of the lenders and is trying to sell its debt exposure and exit the syndicate, sources said. There was some supply of the company’s term loan in the mid-80s in December that did not trade.
Potential interested parties could include large funds that have the capacity to fund the U.K. leisure group’s new money need, sources added. The company is
seeking capital as the ongoing Covid-19 health crisis has impacted its liquidity and ability to continue as a going concern.
The group’s banking syndicate agreed in June to provide it with £25 million of new debt, matched by £25 million from shareholders, to mitigate the effects of the pandemic.
The lenders agreed to waive leverage and interest coverage covenants up to the period ending March 2021. The group’s management has warned that its liquidity, leverage and interest covenants will be breached unless a new source of funding is secured.
Virgin Active’s revenue dropped 50.1% year over year to £224.7 million in the nine months ended Sept. 30, according to an unaudited interim
report from the company’s owner, South African investment group
Brait. The decline was due to the closure of clubs in all territories in which the group operates due to government-mandated lockdown restrictions.
The group reported an EBITDA loss of £8.4 million compared with a profit of £102.4 million in the previous period. Net debt at the end of September was £358.5 million, up from £344.3 million in March. Adjusted for the estimated effect of working capital and cost deferrals as a result of the impact of coronavirus on the business, the figure increases £82.6 million, or 23%, to £441.1 million, the report added.
Virgin Active and Lloyds Banking Group did not respond to Reorg’s request for comment.
--Jaishree Kalia