New money for U.K. leisure group Virgin Active is to be installed in stages with most of it ranking junior to the company’s existing debt, sources told Reorg. Negotiations to secure a rescue deal for the gym chain operator are ongoing.
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The company’s investors, including Richard Branson’s Virgin Group,
offered a £65 million injection comprising new money and further brand royalty fee deferrals on Feb. 11.
Allen & Overy is acting as legal counsel to the company and Deloitte is advising the company on restructuring discussions with landlords. Lenders are represented by Hogan Lovells and Alvarez & Marsal.
The company’s South African owner
Brait revised parts of its business proposal which was presented to lenders last week, sources added.
Meanwhile, a group of Virgin Active landlords has reportedly
appointed Coffer Corporate Leisure as advisors to explore exit options. The landlords are said to be preparing contingency plans in case the negotiations for a rescue deal for Virgin Active fall through. The talks, which have been ongoing for weeks, would likely involve landlords taking a significant rent haircut.
In January, two separate £20 million strips of Virgin Active’s term loan, RCF and capex facility
traded in the mid-70s.
The revenue of Virgin Active dropped 50.1% year over year to £224.7 million in the nine months ended Sept. 30, according to Brait’s unaudited interim
report. The fall came as a result of the closure of clubs in all territories in which the group operates due to government-mandated lockdown restrictions. The group’s net debt at the end of September was £358.5 million, up from £344.3 million in March.
--Jaishree Kalia