S&P: Equinox loans B+, CCC+

S&P said it assigned a B+ rating and 2 recovery rating to Equinox Holdings Inc.'s proposed $800 million first-lien term loan due 2024 and $150 million revolving credit facility due 2022.

The 2 recovery rating indicates 70% to 90% expected default recovery.

The agency also said it assigned a CCC+ rating and 6 recovery rating to the company's proposed $200 million second-lien term loan due 2025. The 6 recovery rating indicates 0 to 10% expected default recovery.

The proceeds from the proposed term loans will be used to repay its existing term loan debt.

The refinancing transaction will improve the company's debt maturity profile by extending and staggering its term loan maturities, both of which currently mature in 2020, S&P said.

The company’s B corporate credit rating and stable outlook are unchanged.

In December 2016, Equinox's owner distributed Blink Holdings Inc., an unrestricted subsidiary whose assets were excluded from the collateral package supporting the current credit facilities, out of Equinox and up to the parent, REH II, S&P said.

Although Equinox will no longer control Blink, the agency said it believes Equinox will retain a preferred equity investment in Blink and will continue to consolidate Blink into its financials.

Additionally, there will continue to be common board control of Equinox and Blink, the agency added.

Although S&P said it understands that Blink has secured its own source of financing to support club growth and Equinox is not obligated to provide any support to Blink, Equinox might provide some limited support should the need arise.

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