Fri, 14 Nov 2014 | BUSINESS SALE
New investment is being sought to pump up tired gym chain LA Fitness via a sale of the group.
LA Fitness is presently controlled by four banks, including Royal Bank of Scotland, after a debt-for-equity swap this year with MidOcean Partners, the private equity firm that bought the chain back in 2005.
The chain has hived off 33 of its 80 venues by way of a company voluntary arrangement (CVA). Eighteen of these clubs have been snapped up by Mike Ashley at Sports Direct, which is about to create a new budget gym chain where members can pay just £5 a month.
Talks are now underway between LA Fitness and advisers at Canaccord to seek out fresh investment to carry a refurbishment programme. Chief executive Martin Long’s plans would see the group become more upmarket, disassociating itself from low cost rivals, including easyGym and Pure Gym, who have stepped on the toes of mid-market brands such as LA Fitness and Fitness First.
The sale is expected to pique the interest of both other gym groups and private equity firms. Fitness First is thought to be interested in its London outlets.
In an email seen by the Telegraph, a Mr Long of LA Fitness outlined the positive news for the group: “There is plenty to be optimistic about - membership growth, a second LAX site in Kensington, a strengthened network of core profitable clubs, a successful CVA process near completion and clubs starting to see investment and refurbishment.”
LAX is the new “premium” brand introduced last year with the opening of a club in Aldgate, City of London. Mr Long wants to speed up the roll out of the new branding.
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