S&P rates Fitness International loan B

Standard & Poor’s said it assigned a B corporate credit rating to Fitness International LLC.

The outlook is stable.

S&P also said it assigned a B rating to the company’s proposed credit facility, consisting of a $350 million revolver due 2018, $150 million term loan A due 2018 and $1.5 billion term loan B due 2020. The agency also assigned a recovery rating of 3, indicating 50% to 70% expected default recovery, to the credit facility.

The proceeds will be used to refinance existing debt, S&P said, and fully repurchase a current owner’s equity interests in the company and a portion of another owner’s equity interests.

The ratings reflect the company’s fair business risk profile and highly leveraged financial risk profile, the agency said.

The company operates in the highly competitive fitness club industry with the low barriers to entry in the industry, S&P said.

The ratings also consider its exposure to potential declines in demand during weak economic climates, the agency said.

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