Research Update: Fitness International LLC Upgraded To 'B' From 'B-' On Improved Covenant Headroom, Outlook Stable; New Debt Rated 'B+'

Fitness International LLC intends to refinance its existing senior secured credit facilities with a new $300 million revolving credit facility, a $300 million term loan A due in 2028, and a $675 million term loan B due in 2029. The proposed transaction will be leverage-neutral, and we expect the company's leverage will continue to improve over the next 12 months because of EBITDA growth. The new credit agreement will include a modified fixed-charge coverage ratio covenant, which we expect the company to maintain more than 15% covenant headroom under our base case. Therefore, we raised our issuer credit rating on Fitness International to 'B' from 'B-'. At the same time, we assigned our 'B+' issue-level rating and '2' recovery rating

...- Fitness International LLC intends to refinance its existing senior secured credit facilities with a new $300 million revolving credit facility, a $300 million term loan A due in 2028, and a $675 million term loan B due in 2029. The proposed transaction will be leverage-neutral, and we expect the company's leverage will continue to improve over the next 12 months because of EBITDA growth. The new credit agreement will include a modified fixed-charge coverage ratio covenant, which we expect the company to maintain more than 15% covenant headroom under our base case. - Therefore, we raised our issuer credit rating on Fitness International to 'B' from 'B-'. - At the same time, we assigned our 'B+' issue-level rating and '2' recovery rating (70%-90%; rounded estimate: 85%) to the company's proposed first-lien senior secured facilities. - The stable outlook indicates our expectations for modest growth in Fitness International's revenue and EBITDA and for its S&P Global Ratings lease-adjusted...

Research Update