Moody’s may upgrade L.A. Fitness

Moody’s Investors Service said it placed L.A. Fitness International LLC’s B2 corporate family rating, B3-PD probability of default rating and B1 senior secured bank credit facility rating under review for upgrade in response to recent positive trends in operating performance and financial leverage.

The agency said it will primarily evaluate the company’s recent and projected financial performance to assess the likelihood that the improvement in performance is sustainable.

Moody’s also said it will re-examine financial policy risk under private equity ownership to assess the company’s ability to maintain credit metrics in line with higher ratings over a longer period of time.

The debt ratings under review include the B1 (LGD 2) ratings on the company’s $350 million senior secured revolver due 2018, $250 million senior secured term loan A due 2018 and $1 billion senior secured term loan B due 2020.

The company’s current ratings reflect its relatively high debt leverage with a debt-to-EBITDA ratio of 4.6x as of March 31, Moody’s said.

The ratings also consider expectations for increasing operating costs, as well as continued softness in growth due to competition from small-box gyms, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.