Gym chain LA fitness has announced a restructuring plan that will see 33 of its 80 UK clubs put up for sale.
The restructuring plan is intended to focus the chain on a “smaller portfolio” of clubs and “significantly reduce its debt burden”.
LA fitness CEO, Martin Long, said: “LA fitness is a strong brand that is valued by its members. We have had a good start to 2014 and our membership numbers are up year-on-year.
“It is a structural issue that is hampering LA fitness and it is through this process that we will create a leaner, more operationally efficient business, with a long-term, sustainable future as one of the UK’s leading health and fitness operators.
Importantly, we will have 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.”
The group has also proposed landlord Company Voluntary Arrangements (CVA), which, if approved, will revise the lease terms at some of its clubs, allowing for a restructuring package designed to reduce the group’s debts by approximately £250m.
The implementation of the agreed restructuring package is conditional upon the CVAs being approved.
Matt Smith and Neville Kahn of Deloitte have been appointed as nominees to supervise the CVA proposals.
Smith, partner at Deloitte, said: “The proposed CVAs will allow the group to revise lease terms and proceed with its wider restructuring plan.
“The proposals put forward offer the best possible solution for the group and all of its stakeholders. The wider restructuring plan is contingent on the CVAs being approved by creditors on 24th March 2014 and, if the CVAs are not approved, the companies face potential administration.”