Moody's affirms 24 Hour Fitness

Moody's Investors Service said it affirmed the B2 corporate family rating of 24 Hour Fitness Worldwide, Inc. and its $100 million revolving credit facility due 2011 and $600 million term loan B facility due 2012 at Ba3 (LGD3, 32%).

The outlook remains stable.

The B2 corporate family rating is constrained by modestly weak credit metrics for the rating category, an expected decline in comparable club revenues over the next few quarters, geographic concentration in California and the potential for tightening headroom under financial covenants, the agency said.

Ratings are supported by the company's large base of profitable fitness clubs in leading markets, aggressive cost reduction and efficiency initiatives, and the expectation of improved free cash flow in 2009 as the company reduces planned capital expenditures and benefits from the maturation of recently built clubs, the agency noted.

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