FITNESS First has taken steps to avoid going into administration.
The struggling gym company, which has gyms in Waterlooville and Southsea, has proposed a company voluntary arrangement which 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.
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.
According to KPMG, which administering the firm, 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.’
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.