13 Mar 2021
Battle for Virgin Active: restructure 'still possible'
BY Tom Walker
A battle to save Virgin Active is continuing, as the company works to secure a restructuring plan which would be approved by its creditors.
Investors are understood to be ready to provide a £60m+ funding injection into the fitness operator, in a bid to secure its future.
Any fresh investment, however, would need to be accompanied by a "wide-ranging" restructure of the business.
Virgin Active is 80 per cent owned by Brait – the investment group of former billionaire, Christo Wiese – which bought its stake from Richard Branson's Virgin Group and investor CVC in April 2015, leaving Branson with 20 per cent and valuing the business at £1.3bn.
HCM understands that a restructuring plan is still the favoured option for the company's backers and that a number of unviable sites have already been identified for disposal. Virgin Active had 243 health clubs globally prior to the pandemic (at the end of 2019) with 42 in the UK.
According to industry sources, Virgin Active's creditors – including some landlords – have been unwilling to agree to a restructuring deal.
Speaking to HCM, those close to the matter said Virgin Active is hoping to complete the rescue deal in late April and the company is not ruling out legal action to "bring landlords into line".
Time is of the essence for Virgin, as gyms in England are set to reopen on 12 April.
It is believed that, should the company owners fail to secure a restructuring deal by May, there is a real possibility of the company going into administration.
This would then lead to a winding up of the company and a sale of its assets.
HCM has learned that, should this happen, there are a number of operators looking to pick up sites from administrators as going concerns.
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