CHICAGO — Since announcing in March that it might file for bankruptcy, Bally Total Fitness has continued to make headlines.
On April 26, Bally said that it was informed by the New York Stock Exchange (NYSE) that its common stock would be suspended. The NYSE formally delisted Bally's stock before the market opened on May 2. The stock, which closed at 68 cents on May 2, is now quoted on the Pink Sheets electronic quotation service. The NYSE indicated that its delisting of Bally's stock was a result of Bally's failure to satisfy the NYSE's continued listing standards, including minimum market capitalization and minimum average share price requirements. Also, the NYSE considered Bally's failure to timely file its 2006 annual report with the Securities and Exchange Commission and its stated liquidity position.
The day before the delisting announcement, Bally agreed to sell its 16 Toronto, Canada, facilities to Extreme Fitness Inc., which is acquiring six of the clubs, and GoodLife Fitness Centres Inc., which is acquiring the remaining 10 clubs. The properties include nine Sports Clubs of Canada and seven Bally Total Fitness clubs. Terms of the transactions, including lease negotiations, were not disclosed.
The sale of the 16 Canadian clubs is part of Bally's strategy to divest non-core assets to focus on the core Bally brand and operations in the United States. Proceeds from the transactions are estimated to be approximately $16.6 million ($19.6 million Canadian) and will be available to support operations.
GoodLife Fitness, founded in 1979, has grown into the largest group of fitness clubs in Canada with more than 300,000 members. The company plans to have 151 locations by December.
Extreme Fitness, founded in 1995, already has six clubs in the Greater Toronto area and approximately 45,000 members. The acquisition not only doubles the number of Extreme Fitness facilities in Greater Toronto, but it also increases memberships by more than 30 percent.
Bally also announced that it had negotiated the form of limited waiver and forbearance arrangements with holders of its 10½ percent senior notes due in 2011 and its 9⅞ percent senior subordinated notes due this year. The forbearance agreement under Bally's senior secured credit facility required that forbearance arrangements be in place with respect to each series of notes by May 14.
In a separate story, a federal judge in California ordered Bally to pay $24,000 to a Sikh man who sued when the company denied him a job after asking if he was Muslim, the U.S. Equal Employment Opportunity Commission said.
According to a report in the Fresno (CA) Bee, Sukdev “Devin” Singh Dhaliwal applied for a sales job with one of Bally's five Fresno fitness centers in 2004. An interviewer from Bally asked Dhaliwal, who was born and raised in California, about his religious and ethnic background. Bally then denied Dhaliwal a job and hired non-Sikh, non-Indian applicants with less experience, according to the commission.
The newspaper also reported that under the consent decree, Bally must pay Dhaliwal $24,000 in damages and provide training in equal opportunity hiring practices to managers at its Fresno locations.