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Bally receives notices of defaults for 9 7/8% notes, 10½% notes
New York, Aug. 5 - Bally Total Fitness Holding Corp. said it received notices of default for its 9 7/8% senior subordinated notes due 2007 and its 10 ½% senior notes due 2011.
The notices follow the expiration of a waiver of the financial reporting covenant on July 31.
Bally now has 30 days to obtain an extension of the waiver or remedy the default.
Negotiations are continuing for an extension, the company said, adding it has received consents from holders of 96.31% of the 10½% notes and 42.88% of the 9 7/8% notes.
In addition, the notice starts a 10-day countdown to a default under Bally's $275 million credit agreement.
Bally also said it has extended the consent deadline for its solicitation of consents to 5 p.m. ET on Aug. 10 from 5 p.m. ET on Aug. 5.
In order to extend the waiver, Bally needs consents for a majority of each series of notes.
Bally previously extended the consent solicitation on July 27 and July 29.
The company announced the solicitation on July 13, saying it was seeking a 90-day extension of the waivers from its public noteholders on its delay in filing financial statements, pushing back the deadline to Oct. 31, according to a company news release.
Bally said at the time that it will not be able to provide its audited financial statements for 2002 to 2004 by July 31 and is asking for an extension of the waivers of reporting covenant defaults from holders of the two series of notes.
These defaults result from the company's previously announced failure to timely provide its financial statements for the second and third quarters and full year 2004 and the first quarter of 2005 with the Securities and Exchange Commission and deliver the financial statements to the trustee and holders of notes.
Also, the company expects a delay in filing its 10-Q report for the quarter ended June 30, which would also be covered by the waiver extension.
Bally is a Chicago-based health club chain.
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