October 23, 2017 / 11:40 AM / in a year

Banks work out £400 million of debt for possible Pure Gym sale

LONDON (Reuters) - Bankers are working on debt financings totalling up to £400 million to back a potential sale of Britain’s largest chain of health and fitness clubs, Pure Gym IPO-PGYM.L, banking sources said.

Pure Gym’s major shareholder CCMP Capital Advisors has controlled the chain since 2013 and a sale comes over a year after it announced, and later cancelled, a £190m initial public offer of shares due to “challenging IPO market conditions”.

Harris Williams and Jefferies are advising on a sale process and final round bids are due on November 2, following a first round in September, the sources said.

The sale has attracted a number of interested parties including Goldman Sachs Private Equity, Leonard Green, Pamplona and Providence, the sources said.

CCMP Capital Advisors and all the other private equity firms were not immediately available to comment.

Bankers are working on debt financings of up to 5.5x Pure Gym’s approximate £70 million Ebitda, via senior and subordinated loans or bonds or under 5.0 times debt to Ebitda on an all-senior basis, the sources said.

Leverage levels are being compressed somewhat as bankers are cautious around gyms after difficulties involving a number of other gym chains including Fitness First and David Lloyd, the sources said.

“Lenders hate gyms as they’ve had a poor experience with them previously such as Fitness First and David Lloyd. Having said that, Pure Gym is quite good and a liked credit,” a senior banker said.

Founded in 2009, Pure Gym has over 180 gyms nationwide. It offers its facilities with no fixed contracts, according to CCMP’s website.

Editing by Christopher Mangham

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