NEW YORK -- Crunch announced today that it has reached an agreement to be acquired by its senior secured lenders, New Evolution Fitness Company (NEFC), founded by Mark Mastrov and Jim Rowley, and certain investing affiliates of Angelo, Gordon & Co.
Upon completion of the sale, Mastrov, the founder of 24 Hour Fitness, and Rowley, a former 24 Hour co-president, will serve as chairman and vice chairman of the board of directors of Crunch, respectively, overseeing the existing senior management team of Crunch, which will remain with the company.
To effect the transaction, Crunch has filed for Chapter 11 bankruptcy. The sale will be accomplished through a bankruptcy process that permits other interested parties to make competing offers. Subject to the approval of the bankruptcy court and other customary conditions, the sale is expected to close in approximately 60 days.
â€śThis process of reorganization, along with the ongoing involvement of NEFC, will allow Crunch to emerge as a strong player focused on what we have become famous for: being the place where entertainment meets fitness,â€ť Tim Miller, CEO of Crunch, said in a statement. â€śThis transaction will allow us to restructure our balance sheet and close several unprofitable locations. Mark Mastrov and Jim Rowley strongly believe in Crunch, and I am confident their industry expertise, vision and leadership will prove to be invaluable as we execute our business plan going forward.â€ť
Crunch said that at this time, each of its locations will remain open, other than two Manhattan clubs that will close immediately. The company said it has secured sufficient capital to fund operations through its reorganization.
â€śThe NEFC team is excited to be part of the new ownership group of Crunch,â€ť Mastrov said in a statement. â€śI have always considered Crunch to be one of the most innovative and cutting edge brands in the health and fitness industry since its inception in 1989. I look forward to working with Tim Miller and the entire Crunch management team in growing the Crunch brand, while continuing to deliver the fitness industryâ€™s most unique offerings to our members.â€ť
In January, NEFC announced a partnership with the Ultimate Fighting Championship (UFC), a mixed martial arts organization, to launch a network of UFC gyms.Angelo, Gordon & Co., a private equity firm, bought Crunch from Bally Total Fitness for $45 million in 2005.