Planet Fitness, Hampton, New Hampshire, announced on July 9 it intends to refinance its existing senior secured credit facilities, valued at more than $707 million, with a new securitized financing facility. The transaction, if completed, is expected to occur in the third quarter of 2018.
Planet Fitness will replace $707.7 million in outstanding term loans under its current senior secured credit facilities with a new securitized financing facility of $1.225 billion, the company said in a media release. The new financing facility will include $1.15 billion of senior fixed-rate term notes and $75 million of variable funding notes.
According to the release, the net proceeds of the newly proposed financing facility will be used to repay existing debt under the senior secured credit facilities, to serve working capital purposes and to pay the related transaction costs.
The release states the company cannot assure that the transaction will be successful as outlined, or occur at all.
It is typical for a publicly traded company to secure increased debt, an industry consultant told Club Industry. This could allow Planet Fitness to repurchase stock, grow its business, pay dividends to shareholders and pay off more expensive existing debt.
This is a sign of good news for a public company whose stock price is growing and whose margins continue to impress Wall Street, the consultant said.
In May, Planet Fitness reported first quarter 2018 revenue of $121.3 million, a 33.2 percent increase from the same period last year.
Planet Fitness ranked seventh on Club Industry's Top 100 Health Clubs of 2017, with a 2016 reported revenue of $378.2 million. The company is the highest-ranking franchisor on the list.