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UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

News

Virgin Active investors preparing rescue deal for fitness chain

Virgin Active investors are understood to be preparing a £60m+ funding injection into the fitness operator, in a bid to secure its future.

As reported by HCM in December, Virgin Active has been actively looking to raise cash to buffer it from the impact of the latest lockdowns in Italy and the UK.

Investors are believed to be considering providing the business with new capital, while also negotiating a deal with lenders and landlords, asking them to make a "meaningful financial contribution" to enable the company to continue trading.

Lloyds Bank had been seeking to offload its exposure to Virgin, but it's understood that it has not found any takers.

Virgin Active is 80 per cent owned by Brait – the investment group of former billionaire, Christo Wiese – which bought its stake from Richard Branson's Virgin Group and investor CVC in April 2015, leaving Branson with 20 per cent and valuing the business at £1.3bn.

Filing its 2019 accounts on 24 December 2020, Virgin Active revealed how it has been coping with the pandemic so far.

In spite of mitigating actions taken to reduce the impact of the pandemic on the business – which included senior staff taking a 20 per cent pay cut during closures – the company was forced to take an additional loan of £25m in June 2020, which was matched by a £20m capital contribution from shareholders and a £5m deferral of licence fees.

The directors reported that all interest covenants up to 2021 were waived by lenders and that the company arranged a new liquidity covenant for the period from June 2020 to December 2021.

The accounts show the Virgin Active’s balance sheet is under pressure. Borrowings leapt between 2018 and 2019, increasing interest payments from £1.18m in 2018 to £13.61m in 2019 and driving the business from a £4.67m profit in 2018 to a loss of £1.18m in 2019.

In the financial statement accompanying its 2019 accounts, Virgin Active said it aims to be able to continue to trade with the support of its ultimate backer – Virgin Active Investment Holdings – which has indicated it will stand behind the business, however, the directors say they accept that although this is the current position, this reliance on the financial support of the holding company must be seen as representing a “material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern.”

Virgin Active had 243 health clubs globally at the end of 2019, with 42 in the UK.

Financial arrangements for the South African business are separate from those of the remainder of the portfolio.

Virgin Active investors are understood to be preparing a £60m+ funding injection into the fitness operator, in a bid to secure its future.
HAF,FIT,IND,PTS
2021/THUMB347136_385793_841873.jpg
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News

Virgin Active investors preparing rescue deal for fitness chain

Virgin Active investors are understood to be preparing a £60m+ funding injection into the fitness operator, in a bid to secure its future.

As reported by HCM in December, Virgin Active has been actively looking to raise cash to buffer it from the impact of the latest lockdowns in Italy and the UK.

Investors are believed to be considering providing the business with new capital, while also negotiating a deal with lenders and landlords, asking them to make a "meaningful financial contribution" to enable the company to continue trading.

Lloyds Bank had been seeking to offload its exposure to Virgin, but it's understood that it has not found any takers.

Virgin Active is 80 per cent owned by Brait – the investment group of former billionaire, Christo Wiese – which bought its stake from Richard Branson's Virgin Group and investor CVC in April 2015, leaving Branson with 20 per cent and valuing the business at £1.3bn.

Filing its 2019 accounts on 24 December 2020, Virgin Active revealed how it has been coping with the pandemic so far.

In spite of mitigating actions taken to reduce the impact of the pandemic on the business – which included senior staff taking a 20 per cent pay cut during closures – the company was forced to take an additional loan of £25m in June 2020, which was matched by a £20m capital contribution from shareholders and a £5m deferral of licence fees.

The directors reported that all interest covenants up to 2021 were waived by lenders and that the company arranged a new liquidity covenant for the period from June 2020 to December 2021.

The accounts show the Virgin Active’s balance sheet is under pressure. Borrowings leapt between 2018 and 2019, increasing interest payments from £1.18m in 2018 to £13.61m in 2019 and driving the business from a £4.67m profit in 2018 to a loss of £1.18m in 2019.

In the financial statement accompanying its 2019 accounts, Virgin Active said it aims to be able to continue to trade with the support of its ultimate backer – Virgin Active Investment Holdings – which has indicated it will stand behind the business, however, the directors say they accept that although this is the current position, this reliance on the financial support of the holding company must be seen as representing a “material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern.”

Virgin Active had 243 health clubs globally at the end of 2019, with 42 in the UK.

Financial arrangements for the South African business are separate from those of the remainder of the portfolio.

Virgin Active investors are understood to be preparing a £60m+ funding injection into the fitness operator, in a bid to secure its future.
HAF,FIT,IND,PTS
2021/THUMB347136_385793_841873.jpg

News

The best in the business from across the physical activity sector were honoured last night
At UK Active’s Active Uprising event yesterday (30 June) in Birmingham, Hattie Jones, the head
HCM understands researchers are moving closer to creating a pill to mimic some of the
Establishing new data and insight services and strengthening relationships with both government and the NHS
More than one in five (27 per cent) Americans belonged to a health club or
Ultimate Performance (UP) – the private gym chain and PT business – has opened a
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Luxury hotel chain Mandarin Oriental has launched a new brand called Intelligent Movement to deliver
Boutique fitness chain 1Rebel opens the doors to its tenth club today (Monday 27 June
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Fuel the debate about issues and opportunities across the industry. We’d love to hear from you – [email protected]
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Jeremy McCarthy

Group director of spa, Mandarin Oriental
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Featured supplier news
Featured supplier news: EGYM announces integration with software provider Fisikal
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Featured supplier news
Featured supplier news: Parkwood Leisure celebrates milestone of teaching 100,000 children to swim
Parkwood Leisure, one of the UK’s leading leisure operators, has reached the milestone of teaching 100,000 children to swim through its Learn To Swim Programme.
Featured operator news
Featured operator news: New partnership delivers swimming support to children with disabilities
A new partnership has been launched to provide inclusive swimming for children with mobility, visual and hearing disabilities.
Featured operator news
Featured operator news: New £42m Moorways Sports Village to open on 21 May
Everyone Active will open Moorways Sports Village to the public on Saturday 21 May with a grand opening weekend – in time for the half term holidays.
Video Gallery
Mindbody, Inc
Mindbody, Inc
Total Vibration Solutions / Floors 4 Gyms / TVS Sports Surfaces
Company profiles
Company profile: Virtuagym
Virtuagym is a global provider of health and fitness technology for coaching, engagement and management ...
Company profiles
Company profile: Panatta Srl
Panatta is an historical fitness brand displaying one of the widest range of products in ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
On demand
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Salt therapy products
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Fitness equipment
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Diary dates
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Diary dates
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