Ashurst is advising Fitness First Australia Pty Limited (FFA) and the other Australian entities in the Fitness First group, on the A$910 million restructuring of secured facilities for the Fitness First Group.
The restructuring involves the implementation of a debt-for-equity swap and the disposal of non-performing clubs in Fitness First’s global portfolio.
The Fitness First group was significantly distressed and, following defaults under its secured banking facilities, at risk of insolvency across multiple jurisdictions. Following substantial trading in the senior debt, a restructuring proposal was made by the Fitness First group in conjunction with the majority senior lenders which involved: conversion of the A$910 million senior secured facilities into an unsecured intercompany loan, the provision of a new £100 million facility to the Fitness First group and the grant of equity in the group to the senior lenders through a new HoldCo level structure.
The restructuring proposal was contingent on the group obtaining the support of the minority senior lenders and the group successfully rationalising its global club portfolio. The satisfaction of those obligations was a complex, but ultimately successful process.
Lead partner on the matter, James Marshall, said: “It was a pleasure to assist Fitness First with its global restructuring. The restructuring enabled Fitness First to streamline its operations as well as significantly strengthen its balance sheet. In addition to a series of complex transactions which involved technical challenges, the restructuring is a successful turnaround story of an iconic business.
“The financial restructuring of the Fitness First group was a challenging and innovative transaction. From the Australian perspective, Fitness First was able to negotiate with its landlords and other stakeholders to streamline its portfolio of leased properties to a sustainable level.
“We were very pleased to have been able to assist Fitness First, 333 Management and the senior lenders to achieve this outcome. We look forward to continuing to assist Fitness First and the other stakeholders in future.”
Ashurst also assisted FFA with its general legal requirements throughout the restructuring process, including the replacement of NAB with Westpac as Australian transactional banker, and the transfer of the Fitness First subsidiaries located in Asia as part of the solvent restructuring.
This transaction is a significant debtor-side appointment for Ashurst on one of the largest restructurings in the Australian market in 2012.
This matter has also given the firm the opportunity to both work, and strengthen ties, with 333 Management, who provided financial and operational advice on the Australian turnaround strategy, and with client KordaMentha, who provided insolvency contingency planning and advice to FFA and the majority senior lenders.
The Ashurst team included partners James Marshall and Timothy Sackar, senior associates Tim Klineberg, Kat Berkeley, Jefferson Wong and lawyers Patrick Loffel, Ashleigh Kable, Lucienne Cassidy (Restructuring); partner Jason Lambeth, senior associate Anton Harris and lawyer James Parkin (Corporate); partner Andrew Deane, senior associates Nic Christian and Jacquie Murray and lawyer Sarah Bourke (Property); partners Barbara Phair and Paul O’Donnell and lawyer Catherine Feng (Tax); and partner Steve Smith, foreign associate Caroline Corish and lawyer Michelle Kwan (Banking).
