Town Sports International Holdings, Inc. Announces Completion of Senior Refinancing & Initiates Full Redemption of Its Outsta...
May 11 2011 - 4:01PM
Business Wire
Town Sports International Holdings, Inc. (NASDAQ: CLUB)
announced today that it has entered into new $350 million senior
secured credit facilities, consisting of a seven-year term loan
facility and a five-year revolving credit facility, and that it has
initiated a full redemption of its outstanding 11% Senior Discount
Notes due 2014 (the “Notes”). Proceeds from the credit facility are
being used to repay outstanding borrowings under the existing
credit agreement dated February 27, 2007 and to pay for the
redemption of the Notes in accordance with their terms.
Bob Giardina, Chief Executive Officer, commented: “I am pleased
that the refinancing of our debt, which was one of my key
initiatives when I returned to TSI last year, has been completed.
We will continue to focus on improving the profitability of our
existing club base, where our initiatives to drive membership and
operate more efficiently are providing results. However, the
flexibility provided by our refinancing will also allow us to
consider strategic initiatives as they present themselves in the
future, as well as opportunities to enhance returns for our
shareholders.”
Dan Gallagher, Chief Financial Officer, commented: “We are very
pleased to complete this senior refinancing, which together with
our existing cash on hand and cash flows from operations, is
expected to meet our estimated capital requirements over the next
several years. We will look to take advantage of the prepayment
flexibility that comes with this facility while our earnings and
cash flows continue to improve.”
The new term loan facility, which matures on May 11, 2018,
generally bears interest at rate of LIBOR plus 5.50%, with a 1.50%
LIBOR Floor, and the new revolving facility, which matures on May
11, 2016, generally bears interest at LIBOR plus 5.50%, with a
step-down of 0.25% or 0.50% during periods as and when certain
leverage ratios are satisfied.
Deutsche Bank Securities Inc. and KeyBanc National Association
served as joint lead arrangers and joint bookrunning managers for
the credit facilities.
The Notes will be redeemed on June 10, 2011, at a redemption
price of 101.833% of the principal amount thereof, plus accrued and
unpaid interest to, but not including, the redemption date. On or
before June 10, 2011, the Notes should be presented to The Bank of
New York, as paying agent for the redemption, at the address set
forth in the notice of redemption for the Notes. The notice of
redemption was sent to all registered holders on May 11, 2011.
Interest on the Notes will cease to accrue on and after the
redemption date.
In connection with the repayment of outstanding borrowings under
the existing credit agreement dated February 27, 2007, the company
will write off $0.9 million in deferred financing costs. In
connection with the redemption of the Notes, the company will
record an early repayment penalty of $2.5 million and will
write-off $0.9 million of related deferred financing costs. Net of
income taxes, the total effect of these items on net income and
earnings per diluted share will be approximately $3.2 million and
$0.14, respectively, using a 26% annual effective tax rate.
This press release does not constitute a notice of redemption of
the Notes.
New York-based Town Sports International Holdings, Inc. is a
leading owner and operator of fitness clubs in the Northeast and
mid-Atlantic regions of the United States and, through its
subsidiaries, owns and operates over 150 health and fitness
facilities in four major metropolitan areas–New York, Boston,
Washington, D.C. and Philadelphia–with over a half million
members.
To learn more about Town Sports, please visit the company's Web
site at www.mysportsclubs.com. Town Sports uses its Web site as a
channel of distribution of material company information. Financial
and other material information regarding Town Sports is routinely
posted on the company's Web site and is readily accessible.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995
Except for historical information contained herein, the matters
set forth in this news release are forward-looking statements.
Statements that are predictive in nature, that depend upon or refer
to events or conditions or that include words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “estimates,” “could”
and similar expressions are forward-looking statements. The
forward-looking statements set forth above involve a number of
risks and uncertainties that could cause actual results to differ
materially from any such statement, including the risks and
uncertainties discussed in the company’s Safe Harbor Compliance
Statement for Forward-looking Statements included in the company’s
recent filings, including Forms 10-K and 10-Q, with the Securities
and Exchange Commission. The forward-looking statements speak only
as of the date made, and the company undertakes no obligation to
update these forward-looking statements.
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