Daily News: November 18, 2013

Deutsche, KeyBanc Arrange $370MM Facility for Town Sports

Town Sports International Holdings announced that its indirect wholly owned subsidiary, Town Sports International, entered into a $325 million term loan facility and a $45 million revolving loan facility. Deutsche Bank Securities and KeyBanc Capital Markets served as joint lead arrangers and joint bookrunning managers for the credit facilities.

Proceeds from the term loan facility were used to repay all amounts outstanding under existing credit agreements and to pay related fees and expenses. None of the revolving loan facility was drawn upon.

The new term loan facility matures on November 15, 2020 and the new revolving loan facility matures on November 15, 2018.

Borrowings under the term loan facility and the revolving loan facility bear interest at either the administrative agent’s base rate plus 2.5% or a LIBOR rate adjusted for certain additional costs plus 3.5%, each as defined in the new credit agreement. The eurodollar Rate has a floor of 1.00% and the base rate has a floor of 2.00%, each with respect to the outstanding term loans.

In connection with entering into the new credit agreement, Town Sports International amended and restated its existing interest rate swap arrangement, which will now have a notional amount of $160 million and will mature on May 15, 2018. The swap will effectively convert $160 million of variable-rate debt under the new credit agreement to a fixed rate of 5.38%, when including the applicable 3.50% margin described above.

Robert Giardina, CEO of the Town Sports International Holdings, commented: “We are pleased we have completed this refinancing which reduced our borrowing costs and extended the term on our debt. This refinancing also provides the company with more flexibility, including flexibility to return value to our stockholders in the form of a dividend.”

New York-based Town Sports International Holdings is an owner and operator of fitness clubs in the Northeast and mid-Atlantic regions of the United States.