Moody’s rates United PF loans B1, Caa1

Moody's Investors Service said it assigned first-time ratings to United PF Holdings, LLC, including a corporate family rating at B2, probability of default rating at B2-PD, first-lien bank credit facilities ratings at B1 (LGD 3) and second-lien term loan rating at Caa1 (LGD 6).

The outlook is stable.

The proceeds from the proposed $465 million first-lien term loan and proposed $110 million second-lien term loan will be used to refinance United PF's existing debt, fund an acquisition of 26 clubs that operate under Planet Fitness franchise agreements and pay related fees and expense, Moody’s said.

The transaction will also include a $75 million first-lien delayed draw term loan that will be available for general corporate purposes, including financing new club openings and potential acquisitions as well as a $20 million revolving credit facility, the agency said.

The ratings reflect its small scale and initial very high adjusted debt-to-EBITDA ratio of 7.5x, Moody’s said.

United PF's revenue scale and credit metrics are weak for the B2 rating category broadly and compared with industry peers, the agency said.

Moody's said it believes that United PF's history of solid operating performance support its ability to reduce debt-to-EBITDA to 5.8x over the next 18 months.

The agency also said it views the company’s industry as highly fragmented and competitive.

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