Creditors of gym chain LA fitness have approved the proposed landlord’s Company Voluntary Arrangements (CVAs) announced earlier this month.
Over 90% of creditors, including landlords, voted in favour of the proposal, enabling the business to revise lease plans and continue with a wider restructuring plan.
As announced at the start of March, LA fitness has put 33 of its 80 UK clubs up for sale to “refocus on a smaller portfolio” and reduce the business’ debt.
Commenting on the announcement, Neville Kahn, managing partner corporate finance at Deloitte, said: “The vote in favour of the CVAs enables LA fitness to address the structural issues that were hampering the group by revising lease terms at a number of its clubs.
“The approval of the CVAs also paves the way for the implementation of an agreed restructuring package that will reduce the group’s debt burden by around £250 million, allowing LA fitness to continue investing in facilities, equipment and technology across its retained portfolio of clubs.
“In addition to securing votes from over 75% of all creditors, for a CVA to be approved a company also needs the support of over 50% of unconnected creditors, of which landlords are the largest group for LA fitness. I am satisfied that the results of the vote represented the best outcome for all stakeholders and will lead to a greater recovery rate for affected landlords.”
LA fitness CEO Martin Long said: “We are pleased that the CVAs have been approved with strong support from landlords.
“We are now able to focus on the long-term future of LA fitness as we create a leaner, more operationally efficient business with the financial strength and operational flexibility to continue investing in facilities, equipment and technology across our retained portfolio of clubs to enhance the experience for our members.”