New York Sports Clubs Parent Mulls Bankruptcy Filing

New York Sports Clubs gyms have been closed for weeks. The chain's parent, facing a $200 million loan maturity in November, is mulling whether to file under the bankruptcy laws, a media report says.
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Town Sports International Holdings  (CLUB) - Get Report, parent of gym chain New York Sports Clubs, is considering a bankruptcy filing ahead of the maturity of a $200 million loan in November, a media report says.

Gyms across the country have been shuttered for weeks as the response to the coronavirus pandemic has shut down most of the economy.

Town Sports has been in talks with lawyers at Olshan Frome Wolosky and has interviewed investment bankers to serve as the company's financial adviser, sources told Bloomberg.

But Town Sports is not yet committed to any course of action. While some observers estimate that the U.S. economy won't be open for the rest of the year, others are optimistic that it will begin to open much sooner. 

Last month, the company's annual report said the U.S. health club industry's revenue grew to $32.3 billion in 2018 from $30 billion in 2017. But it also warned of the risk posed by covid-19.

"Mandatory closures and other related effects of the covid-19 pandemic may cause a material adverse effect to our business," the Securities and Exchange Commission Form 10-K stated. 

"We may experience a material loss of customers, revenue and market share as a result of the suspension of our operations. We expect to experience a significant increase in membership terminations during this time, and we may be unable to recover these customers."

The company was required to close about 95% of its 186 global locations due to emergency orders by state and local governments.