The purchasers of Life Time Fitness are offering 600 million in notes to help fund the purchase of the company which is expected to be finalized this quarter pending regulatory and shareholder approval Photo courtesy Life Time Fitness

The purchasers of Life Time Fitness are offering $600 million in notes to help fund the purchase of the company, which is expected to be finalized this quarter, pending regulatory and shareholder approval. (Photo courtesy Life Time Fitness.)

Life Time Fitness and LTF Merger Sub Announce $600 Million Notes Offering

Life Time Fitness Inc. and LTF Merger Sub Inc. announced today that LTF intends to privately offer $600 million in aggregate principal amount of its senior notes due 2023 to help fund a portion of the purchase of Life Time.

Life Time Fitness Inc., Chanhassen, Minnesota, and LTF Merger Sub Inc. announced today that LTF intends to privately offer $600 million in aggregate principal amount of its senior notes due 2023. LTF is a company controlled by affiliates of Leonard Green & Partners and TPG Capital L.P., which in March announced they, along with LNK Partners, were acquiring Life Time Fitness for more than $4 billion.

The net proceeds from the offering of the notes, which is subject to market and other conditions, will be used to fund a portion of the acquisition of Life Time and to pay certain related fees, commissions and expenses, according to the announcement.

In addition to the notes, the purchase of Life Time is being funded by proceeds from the sale and then lease back of about 29 of the clubs that Life Time owns, according to a story on TheStreetInsider.com. Life Time is known for owning most of the buildings in which its clubs are located, part of the reason the company had proposed a Real Estate Investment Trust (REIT) last year. The sale-leaseback is expected to raise $900 million, according to the article.

Life Time will assume all of the obligations of the issuer under the notes upon the consummation of the acquisition. Consummation of the acquisition is subject to customary closing conditions. The offering and the actual terms of the notes, including the interest rate, will depend on market and other conditions.

The notes being offered will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements, according to the announcement. The notes are being offered only to qualified institutional buyers under Rule 144A and outside the United States in compliance with Regulation S under the Securities Act.

Completion of the sale of Life Time Fitness is conditional upon regulatory approval and shareholder approval, as Life Time Fitness currently operates as a public company.  

In late February, Life Time reported a 7 percent revenue increase to $1.291 billion in 2014 compared with 2013. The company ranked third last year on Club Industry's annual Top 100 Health Clubs list with 2013 revenue of $1.206 billion.

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