S&P: 24 Hour Fitness on watch

Standard & Poor's said it placed its ratings, including its B corporate credit rating, on 24 Hour Fitness Worldwide Inc. on CreditWatch negative following the company's announcement that it has agreed to be acquired by Forstmann Little & Co.

Also on watch are 24 Hour Fitness' B rated $405 million term loan B due 2009 and CCC+ rated $120 million senior subordinated notes due 2009.

S&P said the CreditWatch listing is based on concerns that the transaction could increase 24 Hour Fitness' debt leverage and pressure cash flow through higher interest expense.

However, S&P said the company's performance has been improving since it divested its European club operations in 2002.

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