CHICAGO, Dec. 3 Bally Total Fitness Corporation ("Bally")today announced that it has filed for voluntary chapter 11 bankruptcyprotection. The chapter 11 petition was filed today in the U.S. BankruptcyCourt for the Southern District of New York. Bally intends to use the chapter11 process to significantly reduce debt from its balance sheet whilestreamlining and strengthening its core operations. It expects to accomplishthese goals through either a sale of the business as a going concern orthrough a chapter 11 plan of reorganization.
Bally has received strong indications of interest from a number ofprospective purchasers and is engaged in active and advanced negotiations withcertain of its lenders regarding an agreement to purchase the Company's assetsas a going concern. The Company seeks to complete these sale negotiations andenter into a definitive agreement as promptly as possible, subject toBankruptcy Court approval of the sale transaction.
The Company is confident that if a sale does not occur on terms acceptableto the Company and its stakeholders, it can execute a "stand-alone"reorganization plan based on Bally's comprehensive new business plan, which isalready being implemented by the Company. This business plan, which ispredicated on enhanced efficiencies, organizational transformation anddisciplined cost savings measures, has quickly led to improved operationalmetrics and is expected to have a significant positive impact on the Company'soperations in the long term.
In conjunction with the chapter 11 filing, Bally intends to use existingcash reserves and ongoing cash receipts to maintain normal operations. IfBally successfully negotiates a sale transaction with its lenders, they wouldprovide the Company with debtor-in-possession ("DIP") financing as anadditional source of liquidity to support Bally's ongoing operations. Ballyanticipates that these financial resources will provide ample liquidity forworking capital needs and will allow for continued operation of Bally'sbusiness throughout the reorganization process.
Michael Sheehan, Chief Executive Officer of Bally, said, "Over the pastfive months, Bally has significantly improved its operating processes andexpense management and streamlined its organizational structure, leading to amarked improvement in Bally's current and projected operating performance.Unfortunately, the burden of Bally's long-term indebtedness, coupled with thelack of refinancing options in today's constrained credit markets, havelimited our ability to restructure using out-of-court vehicles, leaving Ballywith no alternative other than the actions announced today."
He added, "The chapter 11 process provides the best means for Bally toemerge a stronger, healthier company. With the opportunity to restructure ourbalance sheet and significantly reduce our indebtedness, Bally will have theability to invest in our clubs and fund future expansion, which willultimately benefit members and all stakeholders."
"Bally will remain a strong national brand and industry leader, servingover 3.1 million members from coast to coast."
Bally has retained Kramer Levin Naftalis & Frankel LLP as bankruptcycounsel and Houlihan Lokey Howard & Zukin as financial advisors.
For additional information on Bally's chapter 11 filing, please visitwww.kccllc.net/Bally or call toll free 888-251-3046.
About Bally Total Fitness
Bally Total Fitness is among the largest commercial operators of fitnesscenters in the U.S., with 347 facilities operating under the Bally TotalFitness(R) and Bally Sports Clubs(R) brands. Bally offers a unique platformfor distribution of a wide range of products and services targeted to active,fitness-conscious adult consumers.
SOURCE Bally Total Fitness Corporation