24 HOUR FITNESS: S&P Downgrades ICR to ‘D’ on Missed Payments

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S&P Global Ratings lowered its issuer credit rating on U.S.-based fitness club operator 24 Hour Fitness Worldwide Inc. to ‘D’ from ‘CCC+’ after the company did not pay its June 1 interest payment on its senior notes due 2022.

“We are lowering our issue-level rating on the company’s senior unsecured notes to ‘D’ because we believe the company is unlikely to make the notes interest payment within the 30-day grace period. We are also lowering our issue-level ratings on the company’s senior secured term loan and revolver to ‘CCC-’ from ‘B-’ to reflect our belief it is unlikely the company will make its upcoming interest payments on this debt,” S&P said.

24 Hour Fitness did not pay its June 1 interest payment on its senior notes due 2022 and has entered into a 30-day grace period with its lenders. S&P lowered the issuer credit rating to ‘D’ because it believes the company will fail to pay its debt service obligations as they come due. S&P believes that COVID-19-related fitness club closures have materially impaired the company’s liquidity position. In addition, there are credible press reports the company is seeking a debt restructuring or Chapter 11 bankruptcy filing. While the company is current on its senior secured term loan and revolver, substantial doubt exists whether the company will make its interest and amortization payments on these facilities, due on June 30 and July 17, respectively.”

Environmental, social, and governance (ESG) credit factors for this credit rating change:

— Health and safety factors

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