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Luxury gym chain Equinox raised $1.8 billion from a group of private capital investors to refinance $1.2 billion in maturing debt on Friday, giving it financial breathing room after the pandemic battered its business.
The group is led by Sixth Street, one of the world's largest private lenders, and established US private equity investor Silver Lake. Equinox said in a press release on Friday that they will infuse $1.8 billion in debt to refinance outstanding loans and fund working capital and new club growth.
The refinancing will take place in two tranches of loans and does not include any preferred stock, or other debt that could be converted into equity and dilute existing Equinox stockholders, according to two people familiar with the matter.
Equinox, which is owned by the founders of Related Real Estate Group, faced a liquidity crunch as a result of the 2020 pandemic when it was forced to close its gym chains for several months and saw its membership decline. Since then, its financial health has improved, but rising interest rates and the high level of its debt have limited its options to refinance loans, exacerbating fears that it could face a liquidity crisis.
Earlier this week, ratings agencies S&P Global and Moody's put Equinox on watch for a rating downgrade deeper into junk territory, fearing it could face restructuring if it is unable to refinance loans.
Standard & Poor's noted in a March 5 note that the company had only $44 million of cash left on hand, and predicted that Equinox would be “unable to generate sufficient cash flow over the next year to cover fixed charges” if it refinances. its debts at the prevailing rate. Rates.
But a consortium of private capital groups and some existing investors in Equinox were able to avert the crisis by arranging a refinancing.
The investor group also includes private credit groups Ares Management and HPS, and L Catterton, a private equity group that invested in Equinox in 2017. Reeld executives are also investing in the deal.
Equinox said the refinancing came at a time when its financial picture was recovering. Its revenues increased by 27 percent last year and the group is building 25 new clubs, increasing its presence by about 20 percent.
“We are seeing record performance in revenue growth and member engagement, demonstrating our position as a global leader in high-performance luxury lifestyle,” said Harvey Spivak, CEO of Equinox.
