Moody's cuts 24 Hour Fitness

Moody's Investors Service said it downgraded the corporate family rating and probability of default rating of 24 Hour Fitness Worldwide, Inc. to B3 from B2, along with its $75 million secured credit revolving credit facility due 2015 and $600 million secured credit term loan B facility due 2016 to Ba3 (LGD 2, 18%) from Ba2 (LGD 2, 18%).

The outlook was changed to stable from negative.

The downgrade reflects declining cash revenues and adjusted EBITDA during 2009 and the first half of 2010, Moody's said.

The company's profitability has been negatively affected by the difficult environment for consumer spending, particularly for more discretionary services such as personal training, elevated customer attrition levels and the shift to monthly dues paying memberships, the agency said.

The ratings are supported by the company's large base of profitable fitness clubs in leading markets, aggressive cost reduction and efficiency initiatives, Moody's said, and the pending maturation of fitness clubs opened over the last few years.

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