A deal that LA Fitness had planned to consummate after it received a $300 million acquisition loan has fallen through, according to sources.
The Irvine, CA-based company had a letter of intent to acquire Urban Active, Lexington, KY, sources say. As rumors were circulating in mid-April about the proposed deal, Urban Active’s CEO Royce Pulliam and General Counsel John Gragg told Club Industry that it was not in negotiations with LA Fitness to be acquired. When asked about any future mergers or acquisitions, Pulliam said, “At this point, we have no comment on that.”
The LA Fitness loan was acquired from GE Capital, Norwalk, CT, a division of General Electric, the same company that provided Planet Fitness with a $40 million loan last year. Standard and Poor’s Leveraged Commentary and Data (LCD) first reported news of the LA Fitness loan. GE was shopping the loan to potential lenders and has structured the credit as a $100 million revolver and a $200 million term loan, LCD reported.
LA Fitness declined to comment on the funding and the possible acquisition.
One source says that the proposed LA Fitness acquisition of Urban Active “fell apart at the last minute.”
“I never believed it from the get-go,” the source says.
LA Fitness has seven clubs in Ohio and one club in Kentucky, two states where most of Urban Active’s clubs are located. Urban Active has 36 clubs in seven states, including two clubs expected to open in July.
LA Fitness recently opened new clubs in Pasadena, MD, and Tucson, AZ, and has more than 360 clubs across the country.
It is not known what will happen to the $300 million loan that LA Fitness received.