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Item 2.04.
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Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
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On August 14, 2020, pursuant to that certain Credit Agreement, dated as of November 15, 2013, as amended (the “Credit Agreement”; capitalized terms used but not defined in this Current Report shall have the meanings given to such terms in the Credit Agreement) by and among TSI Holdings II, LLC, Town Sports International, LLC (the “Borrower”), the Lenders party thereto and Deutsche Bank AG New York Branch as administrative agent, Borrower was required to repay all remaining outstanding indebtedness under the Revolving Credit Facility. Borrower’s failure to make payment of such amounts constitutes an Event of Default under the Credit Agreement. Accordingly, the Required Lenders may by written request to the Administrative Agent cause the issuance of a notice of default to Borrower and immediately exercise remedies under the Credit Agreement, including without limitation by declaring the principal of and any accrued interest in respect of all Loans, Notes, and all Obligations owing thereunder to be immediately due and payable. As of August 14, 2020, $14,163,752 was outstanding under the Revolving Credit Facility.
Borrower is in discussions with its Lenders regarding obtaining an extension to the maturity date of the Revolving Credit Facility or entering into a forbearance agreement that would forestall the exercise of remedies under the Credit Agreement. However there can be no assurance that the parties will be able to reach agreement on the terms of such an extension or forbearance agreement.
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Item 3.01
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Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
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On August 18, 2020, Town Sports International Holdings, Inc. (the “Company”) received a notification letter from the Listing Qualifications Department of Nasdaq indicating that as a result of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the period ended June 30, 2020 (the “Second Quarterly Report”), and because the Company remains delinquent in filing its Quarterly Report on Form 10-Q for the period ended March 31, 2020 (the “First Quarterly Report,” and together with the Second Quarterly Report, the “Reports”), the Company remains in non-compliance with the continued listing requirements as set forth in Nasdaq Listing Rule 5250(c)(1).
The Company has until September 8, 2020 to submit a plan to regain compliance with Nasdaq’s continued listing requirements with respect to its delinquent Reports. If Nasdaq accepts the plan, Nasdaq can grant an exception of up to 180 calendar days from the filing due date of the First Quarterly Report, or until December 28, 2020, during which the Company can regain compliance. If Nasdaq does not accept the plan, the Company will have the opportunity to appeal that decision to a Nasdaq Hearings Panel.
The Company’s management is working diligently to complete the Reports and intends to file them as soon as practicable.