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Bally gets consents to waive defaults for failure to file financial reports
By Caroline Salls
Pittsburgh, April 10 - Bally Total Fitness Holding Corp. received consents from holders of a majority of its outstanding 10½% senior notes due 2011 and 9 7/8% senior subordinated notes due 2007 to waive the financial reporting covenant defaults under the notes indentures until July 10, according to a company news release.
The defaults arise from the company's failure to file its 10-K annual report for the year ended Dec. 31 with the Securities and Exchange Commission.
The waiver also extends the reporting deadlines for the company's 10-Q reports for the first quarter of 2006 until July 10 and for the second quarter of 2006 until Sept. 11.
As previously reported, lenders under Bally's $275 million senior secured credit facility also agreed to extend financial reporting deadlines for the same periods.
The company said it expects to file its 2005 10-K report and 2006 quarterly reports within the waiver periods.
Bally received consents from holders of about 99% of its senior notes and 94% of its outstanding senior subordinated notes by 5 p.m. ET on April 7, the consent deadline.
Consenting holders will receive a one-time consent fee of $10 or 4.4444 unregistered shares of Bally stock for each $1,000 principal amount of notes at the consenting party's option.
Bally has agreed to sell unregistered stock to Wattles Capital Management, LLC and another large shareholder to finance the payment of cash consent fees and related expenses.
The company said it has 38.5 million shares outstanding and expects to issue 2.76 million shares as part of the lender and noteholder consent process.
MacKenzie Partners, Inc. (212 929-5500 collect or 800 322-2885 toll free) is the information agent and tabulation agent for the consent solicitation.
Bally is a Chicago-based health club chain.
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