Owner of New York Sports Clubs, Lucille Roberts Files for Bankruptcy
September 14 2020 - 8:07AM
Dow Jones News
By Aisha Al-Muslim
Town Sports International Holdings Inc., the parent company of
New York Sports Clubs and Lucille Roberts gyms, has filed for
bankruptcy after facing debt coming due this fall as well as
reduced cash flow and liquidity due to coronavirus-related
closures.
The publicly traded, New York-based gym chain, which operates
about 190 locations, mainly in East Coast cities, filed for chapter
11 protection Monday in the U.S. Bankruptcy Court in Wilmington,
Del.
The pandemic has been particularly challenging for the U.S.
fitness industry, which has tried to safely reopen gyms in states
and counties that allow it. Mandated shutdowns have pushed other
fitness chains into bankruptcy, including 24 Hour Fitness Worldwide
Inc. and Gold's Gym International Inc.
Town Sports had been trying to refinance a loan due in
mid-November by working with prospective lenders. The company had
failed to make certain payments on the loan due in August. The full
loan, with $178 million remaining, is due Nov. 15.
The company owned and operated 185 fitness clubs under various
brands as of March 31, including Philadelphia Sports Clubs, Boston
Sports Clubs, Washington Sports Clubs, Palm Beach Sports Clubs,
Around the Clock Fitness and Total Woman Gym + Spa. It employed
about 9,200 people as of December, with roughly 1,900 working full
time.
Town Sports was forced to close its gyms in March following
state and local government orders aimed at slowing the spread of
the coronavirus. The company closed eight clubs permanently during
the second quarter and it expects to shut down more locations this
quarter.
To offset expenses, Town Sports had terminated employees at
clubs ordered to close and stopped its lease payments. It received
a government-backed loan of more than $2.74 million under the
Paycheck Protection Program in late April, according to securities
filings.
Earlier this summer, Town Sports warned that it doubted it could
stay in business within one year. The company said in June it was
weighing filing for bankruptcy and it needed to raise up to about
$80 million to fund the costs of a potential bankruptcy filing and
to cover operating shortfalls.
WSJ Pro Bankruptcy reported in April that Town Sports had hired
lawyers to explore a potential debt restructuring or bankruptcy
filing. Earlier in April, the gym operator scrapped a deal to
acquire Flywheel Sports Inc., a maker of home fitness bikes. Among
conditions Town Sports had to meet to complete the deal was
refinancing its debt.
Earlier this month, Town Sports said first-quarter revenue fell
16% from a year earlier to $98.1 million. The company had a loss of
$136.3 million in the quarter, compared with a year-earlier loss of
$2.1 million.
Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com
(END) Dow Jones Newswires
September 14, 2020 07:52 ET (11:52 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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