F45 Training subsidiary gets $150 million seven-year facility

By Mary-Katherine Stinson

Lexington, Ky., May 16 – F45 Training Holdings Inc. entered into a credit agreement on May 13 with subsidiary F45 SPV Finance Co., LLC, as borrower, for a $150 million seven-year senior delayed-draw credit facility, which may be increased to $300 million in certain circumstances, according to an 8-K filing with the Securities and Exchange Commission and a company press release.

Fortress Credit Corp. is the administrative agent, collateral agent and a lender for the new facility.

The interest rate under the new facility will be equal to the amount of interest received by the borrower from each franchisee loan agreement.

The new credit agreement contains customary negative covenants restricting the borrower’s ability to incur additional debt, grant liens and make other acquisitions, and requires the company to maintain certain market capitalization levels.

Covenants also include customary events of default, and customary rights and remedies should a default occur.

In connection with the new credit agreement, the company also entered a limited guaranty, capping the borrower’s obligations at an amount not to exceed 10% of the total facility size.

In addition, on May 13 the company, certain subsidiaries as borrower and F45 Training Holdings as franchisor, also amended its existing credit agreement dated Aug. 13, 2021 to allow for the execution of the new credit agreement and to issue warrants in connection with the warrant purchase agreement.

Under the warrant purchase agreement, entered on May 13 with certain affiliates of Fortress, the company is obligated to issue warrants in four tranches each representing 1.25% of the fully diluted shares of company stock. As of May 13, this totaled up to 1,211,210 shares.

Concurrently warrants were also issued that will become exercisable on the date that 50% of the maximum committed amount have been drawn under the new credit agreement. Upon that date, holders may purchase up to 1.25% of the fully diluted shares of company stock as of the vesting date.

The exercise price of the warrants is $16.00 per share of stock, subject to adjustment.

Warrants expire seven years from the date of issuance.

The warrants have a put option. Holders may put back the warrants to the company and settle for shares of stock within 12 months of issuance or settle for cash or shares of stock after 12 months.

The number of shares subject to warrants is capped at 19.9%, or 18,857,319 shares, of the shares outstanding as of May13.

JPMorgan Chase Bank, NA is the administrative agent and Australian security trustee for the amended and restated credit agreement.

Lenders for the existing amended and restated credit agreement are MUFG Union Bank NA and Goldman Sachs Bank USA.

Proceeds from the new facility will be used by the borrower to purchase loans made by another subsidiary, F45 Intermediate Holdco, LLC, to certain franchisees to support the development of new F45 studios across the United States.

F45 is a fitness center franchisor and operator based in Los Angeles.

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