Town Sports launches $75 million add-on term loan with OID in 99½ area

By Sara Rosenberg

New York, Nov. 7 - Town Sports International Holdings Inc. launched its $75 million add-on term loan on Wednesday with an original issue discount in the 99½ area, according to a market source.

Pricing on the add-on matches existing term loan pricing at Libor plus 450 basis points with a 1.25% Libor floor.

The add-on has 101 soft call protection for one year, while the 101 soft call on the existing loan is being reset for a year, the source said.

Deutsche Bank Securities Inc. is the lead bank on the deal.

Proceeds will be used with cash on hand to pay a roughly $92 million, or about $3.75 per share, special one-time cash dividend to stockholders.

Closing is expected to take place this month.

The add-on will be obtained through an amendment to the existing senior secured credit facility.

The amendment would also waive any required excess cash flow prepayment for the period ending Dec. 31, revise the restricted payments covenant to allow for the dividend and allow for adjustments to the calculation of consolidated EBITDA.

Commitments and consents are due on Nov. 14.

Lenders are being offered a 25 bps amendment fee, the source said.

If the company is not able to obtain the amendment on satisfactory terms, it still intends to consider the declaration of a special one-time cash dividend, a news release said. But that dividend would likely be up to $30 million, or about $1.20 per share.

Town Sports is a New York-based owner and operator of fitness clubs.

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