CHICAGO, Aug. 16 Bally Total Fitness(OTC: BFTH) today announced that holders of more than 55% of its 10-1/2%Senior Notes due 2011 (the "Senior Notes") have, subject to the modificationsto the treatment of the Senior Notes described below, agreed to support theproposed modifications to Bally's Joint Prepackaged Chapter 11 Plan ofReorganization (the "Existing Plan" and as so modified, the "Amended Plan")necessary to implement a superior restructuring proposal from HarbingerCapital Partners Master Fund I, Ltd. and Harbinger Capital Partners SpecialSituations Fund L.P. (collectively "Harbinger"), as described below. Inaddition, holders of more than 80% of its 9-7/8% Senior Subordinated Notes due2007 (the "Subordinated Notes"), which include affiliates of TennenbaumCapital Partners, LLC, Goldman, Sachs & Co. and Anschutz Investment Company,subject to bankruptcy court approval, have agreed to support the Amended Plan.
To facilitate the consensual implementation of the Amended Plan, Bally,Harbinger and these consenting Senior Noteholders and Subordinated Noteholdershave entered into a new restructuring support agreement that binds all ofthese major stakeholders to support the Amended Plan. In addition, Harbingerhas signed the investment agreement that provides for its $233.6 millionequity investment in reorganized Bally. This investment agreement and therestructuring support agreement will each become effective upon bankruptcycourt approval, which Bally is seeking at a hearing scheduled for August 21,2007.
As previously announced, under its proposal Harbinger would investapproximately $233.6 million in exchange for 100% of the common equity ofreorganized Bally. The Harbinger Proposal under the Amended Plan wouldprovide equal or better treatment to all holders of unsecured claims againstBally, including the Senior and Subordinated Noteholders. Specifically:
As previously announced, Bally filed a motion with the Bankruptcy Courtfor the Southern District of New York seeking approval to amend the ExistingPlan in the form of the Amended Plan in order to implement theHarbinger-funded restructuring without the need to resolicit votes fromBally's creditors. Bally will now seek approval of that motion based on theAmended Plan as modified to incorporate the revised Senior Note treatmentdescribed above. Bally will also seek the Court's approval of the newrestructuring support agreement that has been signed by Bally, Harbinger, theconsenting Subordinated Noteholders and the consenting Senior Noteholders.
"We are confident in the Company and are pleased to have the support ofthese Senior and Subordinated Noteholders for the restructuring proposal,"said Howard Kagan, Managing Director & Director of Investments of HarbingerCapital Partners. "Additionally, we look forward to Bally presenting theAmended Plan to the Bankruptcy Court next week and to moving forward with therestructuring process with an eye towards a quick emergence from Chapter 11."
"Harbinger presented a superior proposal and Bally did a remarkable jobbringing the parties together. We wish them all great success," said MichaelE. Tennenbaum, Senior Managing Partner of Tennenbaum Capital Partners, LLC.
"We appreciate the overwhelming support of our noteholders for our amendedplan of reorganization and will seek to execute it and emerge promptly fromChapter 11 protection," said Don R. Kornstein, Interim Chairman and ChiefRestructuring Officer of Bally Total Fitness. "We are also grateful for theconfidence that Harbinger has expressed in Bally through its extraordinaryinvestment and look forward to partnering with Harbinger to enhance ourcapital structure, strengthen our balance sheet and make the capitalinvestments necessary to meet the needs of our members while improving ouroperating performance."
Under the amended plan the Company can still consummate the restr