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Home » Fitness » Fitness First plans CVA for 81 clubs with 750 jobs put in the balance

Troubled gym chain Fitness First has told creditors it intends to offload 81 clubs in a company voluntary arrangement that leaves up to 750 jobs in the balance.

The CVA, first revealed by The Daily Telegraph , will help the company avoid going into administration by giving up onerous leases it can no longer afford.

Founded in Bournemouth in 1993, Fitness First (OTC BB: FSTC.OB - news) has about 150 gyms in the UK and is struggling to keep up rental payments after a drop in membership revenues.

CVAs have been controversial in the past because they leave landlords out of pocket. However, in the case of Fitness First, the company has offered landlords a claw-back on future profits if they agree to sign up to the deal.

Richard Fleming, who heads restructuring at KPMG and is supervising the CVA, said landlords could recover between 23p and 28p in the 1, compared to less than 5p in the 1 if the business went into administration.

Last week, unsecured creditors including landlords and suppliers were handed just 3p in the 1 after the collapse of video games retailer Game.

British Property Federation chief executive Liz Peace said: Fitness First is clearly a business in some distress that requires restructuring, and landlords will consider the CVA offer on a business-by-business and a site-by-site basis.

However, it is extremely welcome to see a 'claw-back arrangement included in this CVA and we hope that this further establishes a precedent that the use of these provisions should be included as a matter of course in future CVAs.

The vote on the CVA is set for June 20, with clubs facing either closure, a sale or the possibility of being run by Fitness First on behalf of the landlords.

Mr Fleming added: The CVA is part of a wider restructuring of the company, involving the transfer of the equity to the debt holders and the injection of a new 100m loan facility from the lenders. The wider financial restructuring is dependent on the approval of the CVA by the creditors.

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Fitness First plans CVA for 81 clubs with 750 jobs put in the balance

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Home » Fitness » Fitness First plans CVA for 81 clubs with 750 jobs put in the balance