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Town Sports International Holdings, Inc. Announces Completion Of Senior Refinancing And Initiates Full Redemption Of Its Outstanding 11% Senior Discount Notes Due 2014

Stocks in this article: CLUB

Town Sports International Holdings, Inc. (NASDAQ: CLUB) announced today that it has entered into new $350 million senior secured credit facilities, consisting of a seven-year term loan facility and a five-year revolving credit facility, and that it has initiated a full redemption of its outstanding 11% Senior Discount Notes due 2014 (the “Notes”). Proceeds from the credit facility are being used to repay outstanding borrowings under the existing credit agreement dated February 27, 2007 and to pay for the redemption of the Notes in accordance with their terms.

Bob Giardina, Chief Executive Officer, commented: “I am pleased that the refinancing of our debt, which was one of my key initiatives when I returned to TSI last year, has been completed. We will continue to focus on improving the profitability of our existing club base, where our initiatives to drive membership and operate more efficiently are providing results. However, the flexibility provided by our refinancing will also allow us to consider strategic initiatives as they present themselves in the future, as well as opportunities to enhance returns for our shareholders.”

Dan Gallagher, Chief Financial Officer, commented: “We are very pleased to complete this senior refinancing, which together with our existing cash on hand and cash flows from operations, is expected to meet our estimated capital requirements over the next several years. We will look to take advantage of the prepayment flexibility that comes with this facility while our earnings and cash flows continue to improve.”

The new term loan facility, which matures on May 11, 2018, generally bears interest at rate of LIBOR plus 5.50%, with a 1.50% LIBOR Floor, and the new revolving facility, which matures on May 11, 2016, generally bears interest at LIBOR plus 5.50%, with a step-down of 0.25% or 0.50% during periods as and when certain leverage ratios are satisfied.

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