S&P assigns CCC+ to 24 Hour Fitness notes

Standard & Poor's said it assigned 24 Hour Fitness WorldWide Inc.'s proposed $500 million in senior unsecured notes a CCC+ issue-level rating, with a recovery rating of 6, indicating an expectation for negligible recovery (0%-10%). 24 Hour Holdings III LLC is the issuer of this debt.

The B corporate credit rating and stable outlook are unaffected by this rating action, which follows an April 29 assignment of a B+ issue-level rating and 2 recovery rating to the company's proposed $150 million revolving credit facility and $850 million term loan. The 2 recovery rating indicates an expectation for a substantial recovery (70%-90%) for lenders in the event of default.

S&P said its assessment of 24 Hour's business risk profile as "fair" reflects the competitive nature of the fitness club operating environment, low barriers to entry and high customer attrition in the industry, as well as the vulnerability to economic cycles and exposure to consumer discretionary spending, which can be volatile.

However, S&P believes 24 Hour's geographic diversity and solid market position, with club clusters in several metropolitan areas, modestly offset these factors.

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