Equinox Holdings Inc., the luxury gym chain, is working with legal and financial advisers in an effort to manage upcoming debts and overcome pressures from the Covid-19 pandemic, according to people familiar with the matter.

The fitness company receives advice from lawyers at Kirkland and Ellis, as well as investment bankers at Centerview Partnersthe people said, asking not to be identified to discuss a private matter.

After the pandemic first took hold in the United States and gyms were forced to close, Equinox sought advice from lawyers in Kirkland who specialize in liquidity and liability management. This has since added professionals with restructuring experience to the mix, the people said.

“We are not in restructuring talks. We are not talking about bankruptcy. We are comfortable with our current financial situation, ”said Equinox President Harvey Spevak said in an interview with CNN this week. “We continue to be under a lot of pressure and the sooner Covid is resolved” it will “make a big difference in our business,” he said.

An Equinox representative said in a statement to Bloomberg that the company “is in full compliance with its debt agreements, is very confident in its current liquidity position and has normal discussions” with lenders and partners.

A representative for Kirkland declined to comment, while Centerview did not immediately provide a comment. Reorg, a distressing debt information provider, previously reported on some elements of hiring advisers.

Debt Maturity

The New York-based gym operator faces a February 2021 deadline to redeem certain debts linked to its chain of spin studios SoulCycle. It has also been hampered by closures and social distancing measures that place limits on visitors and opening hours in some places. New York has authorized the reopening of reduced capacity gyms with mask and social distancing requirements. SoulCycle has been allowed to resume operations in some cities and is running outdoor classes elsewhere.

Equinox reopened 75 gyms in the United States, began offering outdoor classes and opened outdoor fitness clubs in New York and Los Angeles, the company said in the statement.

The company’s lenders recently organized and hired lawyers to Akin Gump Strauss Hauer & Feld, Bloomberg reported earlier. This group plans to hear arguments from investment banks who could provide further financial advice early next week, the people said. Debt talks are still in their infancy and the group has not formally engaged with Equinox or its advisers, the people added.

Equinox’s $ 1.02 billion to lend due 2024 was last listed at around 76 cents on the dollar, according to Bloomberg data.

The entire fitness industry is reeling from the forced shutdowns linked to the pandemic. Chains including Gold’s Gym International Inc., 24 hours of fitness in the world inc. and owner of New York Sports Clubs Town Sports International Holdings Inc. have filed for bankruptcy protection over the past several months, as LA Fitness International LLC assesses options, including a capital increase to ease financial pressures and keep operating, Bloomberg reported.

Equinox was granted a stay thanks to a debt amendment that allowed it to delay the buyout of part of SoulCycle’s debt until February 2021 instead of May of this year. The chain had guaranteed SoulCycle’s borrowings under an agreement that normally requires it to buy back the bonds when the spinning chain’s debt to earnings exceeded certain thresholds.

Equinox has burned money and is expected to have high leverage when it reopens after Covid-19 lockdowns, S&P Global Ratings wrote in a report. In June, the gym chain took a new $ 150 million to lend which ranks tied with another billion dollars obligation awaiting reimbursement.

The private channel is supported by Related Cos., The real estate company behind the development of Hudson Yards in New York. In 2017, he has received a minority investment by L Catterton, a consumer-focused private equity firm.

Equinox, which started out as a single fitness club on New York’s Upper West Side, has grown to operate more than 100 gyms around the world, according to its website. It is established in cities such as Los Angeles, Miami and San Francisco and also operates brands such as Blink Fitness, Precision Run and Pure Yoga.

(Updates with loan pricing in the tenth paragraph.)

–With the help of Boris Korby.

To contact the reporter on this story:
Katherine doherty in New York at kdoher[email protected]

To contact the editors responsible for this story:
Rick Green at [email protected]

Claire Boston, Molly Smith

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