Bally Total Fitness again files for Chapter 11
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Wednesday December 3, 2:15 pm ET
By Betsy Vereckey, AP Business Writer
Bally Total Fitness files for Chapter 11 bankruptcy; second time in less than 2 years
NEW YORK (AP) -- Bally Total Fitness Corp. filed for Chapter 11 bankruptcy protection on Wednesday for the second time in less than two years, hindered by debt and limited refinancing options amid the credit crunch.
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The Chicago-based gym operator will use existing cash reserves to continue operating. Bally, which again filed in the U.S. Bankruptcy Court for the Southern District of New York, plans to sell itself or reorganize under Chapter 11.
Early last year, faced with more than $800 million in debt and $45 million in cash, Bally defaulted on its debt. The company's shares were delisted from the New York Stock Exchange for failing to meet minimum price and market capitalization requirements. Bally also was delinquent in filing its 2006 annual report because of errors in historical member data.
At that time Bally filed for Chapter 11 in a "prepackaged" bankruptcy plan that helped simplify the process under the control of Harbinger Capital Partners Master Fund I Ltd. and Harbinger Capital Partners Special Situations Fund LP, which invested about $233.6 million in exchange for Bally's common equity. It emerged in the fall of 2007 as a private company.
Chief Executive Michael Sheehan, who replaced former CEO Paul Toback this June, said Bally's long-term debt and lack of refinancing options left it with limited alternatives, despite ongoing efforts to cut expenses and streamline operations.
Bally's spokesman Larry Larsen declined to comment on possible gym closings or membership trends.
According to CapitalIQ, a financial information service, Bally's has total debt of $811.3 million and cash and short-term investments of $70.8 million. Total assets are listed as $411.4 million.
Unlike last year, Bally is not filing with a "prepackaged" bankruptcy plan, which would have helped shorten and streamline the process. Still, Bally said it hopes to emerge from bankruptcy as quickly as possible.
Bally has retained Kramer Levin Naftalis & Frankel LLP as bankruptcy counsel and Houlihan Lokey Howard & Zukin as financial advisers.
Founded in 1983, Bally operates 347 facilities nationwide that serve at least 3.1 million customers. |
