Capital solutions provider HPS Investment Partners is believed to be in the process of refinancing the $1.5bn Fitness and Lifestyle Group that is owned by Quadrant Private Equity.
Quadrant, as reported by DataRoom at the weekend, is planning to hold off on the sale of a business for about a year as it works to improve its earnings as part of its recovery in the wake of the global pandemic.
The group was straddled with $1.8bn worth of net debt at the end of the year to June 2022, which incorporated the period where gyms were forced to shut amid Covid-19 outbreaks.
But now, the debt level for the business is understood to be about $1.1bn.
Despite the spiralling cost of debt across the board and weaker economic conditions, lender HPS is said to have offered support to the company and will work with Quadrant should any issues arise, say sources.
HPS is understood to have refinanced the full debt syndicate on Fitness and Lifestyle just before the pandemic.
Senior debt facilities a year ago were due in January 2024, but now a refinancing is underway with HPS, say sources.
For the year to June 30, 2022, Fitness and Lifestyle accounts show it generated a $200m loss after losing $177m in the prior financial year.
Revenue was $482m and gross profit was $439m, while staff costs were $177m and finance costs $174.4m.
At the time, auditor PwC said that the business continued to generate significant cash earnings.
It is understood Quadrant fielded offers for parts of the portfolio, including its New Zealand gyms operations, between late last year and April, fuelling suggestions a sale could be on the cards.
But Quadrant’s plan is to sell the company in one line, despite being approached by prospective acquirers keen for a break-up.
Quadrant created Fitness and Lifestyle around 2016 through a series of acquisitions.
It purchased Goodlife Health Clubs from Ardent Leisure in 2016 for $260m, after the acquisition of Jetts Australia (reportedly for less than $100m), and Fitness First Australia from Oaktree Capital for no more than $300m.
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