Moody’s rates Fitness International loans B1

Moody’s Investors Service said it assigned a B1 rating to Fitness International LLC’s new first-lien bank credit facility and placed its B3 corporate family rating and B3 probability of default rating on review for upgrade. Previously, the outlook was stable.

“The review for upgrade is prompted by Moody's expectation that the refinancing transaction will address the refinancing risk associated with the maturity of the existing credit facility in early 2025 without materially affecting cash interest expense. The review also reflects an expectation that operating performance including membership trends will continue to improve in 2024,” the agency said in a statement.

The B1 rating is based on the expectation the CFR will be raised to B2 at transaction close, the agency said. Fitness International’s outstanding loans are due 2025.

The new first-lien bank credit facility consists of a $300 million revolver due 2028, a $300 million term loan A due 2028 and a $675 million term loan B due 2029. Fitness International plans to use the proceeds from the refinancing transaction along with a roughly $61 million draw on the new revolver and $53 million of balance sheet cash to pay off the existing term loan A and term loan B and fund related transaction fees. The proposed revolver will replace the $400 million revolver.

“The B2 ratings on the existing revolver, term loan A and term loan B are not affected and Moody's expects to withdraw these ratings if the facilities are retired in conjunction with the refinancing,” the agency said.

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