S&P rates 24 Hour Fitness CCC-, loan CCC

S&P said it gave All Day AcquisitionCo LLC (24 Hour Fitness) a CCC- issuer rating and CCC issue and 2 recovery ratings to its $200 million senior secured loan.

“The CCC- issuer credit rating and negative outlook reflect our belief 24 Hour Fitness could face a near-term liquidity shortfall if cash flow underperforms our base-case forecast. Despite the company’s meaningful reduction of more than $1.2 billion of debt upon its emergence from bankruptcy, liquidity could be less than adequate and free cash flow negative in 2021,” S&P said in a press release.

The agency also assigned a negative outlook. “The negative outlook reflects the possibility the company could face a near-term liquidity shortfall if its club reopenings, membership and revenue recovery are slower than we assume in our base case, or there are further unanticipated Covid-19-driven club closures over the next few months,” S&P said.

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