TSI Seeking Lenders for $350 Million Debt Facility

Town Sports International (TSI) has called on two investment banks, Deutsche Bank Securities Inc. and KeyBanc Capital Markets Inc., to search for debt institutions that will provide a new $350 million senior secured credit facility.

TSI says it will use the proceeds from the credit facility to repay the existing credit agreement dated Feb. 27, 2007, and to redeem in full its entire outstanding 11 percent senior discount notes due 2014 in accordance with its terms. TSI has a revolving loan facility that expires on Feb. 27, 2012.

The New York-based company is seeking to complete the transaction during the second quarter.

“This is good news, especially if they succeed in replacing their existing debt,” Rick Caro, president of New York-based consulting firm Management Vision, says of TSI. “And in all likelihood, it will come at a lower interest rate.”

In its 2010 year-end financials, TSI reported that its long-term debt is $301.96 million. The previous two years, TSI reported long-term debt totals of $316.51 million and $317.16 million.

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