Bally extends solicitation of default waivers for notes, receives extension from bank lenders

New York, Aug. 12 - Bally Total Fitness Holding Corp. said it has extended its solicitation of waivers from holders of its 9 7/8% senior subordinated notes due 2007 and its 10½% senior notes due 2011 and also announced that it has received an extension to Aug. 31 of the cross-default provision in its bank debt.

The expiration for the note solicitation will now be Aug. 18 instead of 5 p.m. ET on Aug. 12.

Negotiations are continuing for an extension, the company said, adding it has received consents from holders of 96.33% of the 10½% notes and 42.83% of the 9 7/8% notes, up marginally from 96.31% and 42.82% respectively at the last announcement on Aug. 11.

Without the waiver from lenders under its $275 million secured credit agreement, the cross-default on the bank debt would have been triggered on Aug. 14, Bally said.

At its last announcement on Aug. 11, Bally extended the deadline for the note solicitation from Aug. 10.

On Aug. 5, it said it had received notices of default for the two series of notes. The notices follow the expiration of a waiver of the financial reporting covenant on July 31.

Bally has 30 days from the date of the notice to obtain an extension of the waiver or remedy the default. In addition, the notice started a 10-day countdown to a default under Bally's $275 million credit agreement.

Also on Aug. 5, Bally extended the consent deadline 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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