Moody’s cuts United PF

Moody's Investors Service said it downgraded United PF Holdings, LLC's ratings including its corporate family rating to Caa1 from B2, probability of default rating to Caa1-PD from B2-PD, first-lien bank credit facilities to B3 from B1, and second-lien term loan to Caa3 from Caa1. The outlook is negative.

The downgrade reflects Moody's expectations for significant revenue and earnings declines in 2020 due to coronavirus related gym closures as well as the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend on leisure activities and potentially reduce United PF's membership through attrition and lower new recruitment, the agency said.

United PF's rapid pace of new club openings means many facilities were in the midst of ramping up membership when the coronavirus hit and will be challenged to achieve membership targets, which will hurt the company's profitability, the agency added.

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