16 Aug 2023
Shares in F45 plummet after it delists from NY Stock Exchange and 'goes dark'
BY Tom Walker
The share price of F45 Training has fallen by 75 per cent, after the franchised fitness group announced plans to delist from the New York Stock Exchange (NYSE) and deregister its common stock – 92 per cent down on the year – valuing it at US$88m.
The company had already received a notice from the NYSE that it is not currently in compliance with the continued listing standards of the exchange, thanks to being behind in its public filings and the price of its stock being below US$1.00 per share over a consecutive 30 trading-day period.
Prior to the announcement to delist, F45's shares were trading at around US$0.75. At the time writing, the shares are valued at US$0.16.
In a statement announcing the plans to delist, F45 said "going dark" would be the best way forward, as it would provide cost savings and less time spent complying with the requirements of being a listed company.
"We have determined that going dark is the best path for the company due to the expected substantial cost savings and our current inability to realise the traditional benefits of public company status," F45 said.
"The company’s continued low trading value and the resulting low trading price, affects its ability to raise capital from the public markets, effectively use its securities as transaction consideration or attract interest from institutional investors or market analysts.
"Despite the lack of these benefits, the company incurs all of the significant annual expenses and indirect costs associated with being a public company. As a result of going dark, the company will no longer be obligated to pay these significant expenses and will experience substantial cost savings.
"We also believe the reduction in time spent by its management and employees complying with the requirements applicable to Securities and Exchange Commission (SEC) reporting companies will enable them to focus more on managing the company’s businesses, strengthening relationships with franchisees and vendors and growing stockholder value.
"The Company will continue to focus on long-term growth, but without the distraction of short-term financial results and stock price movement."
The announcement was made just days after F45 had revealed that it would not be able to file its latest quarterly report on time.
F45 has been serviced with penalties by NYSE for not filing financial reports for 2022 and has indicated that there are materials errors in its 2021 accounts.
The company says it currently has 1,800 sites, although a number of locations are thought to have closed.
Earlier this year, F45 rebooted its senior management team with the appointment of Tom Dowd as CEO and actor and celebrity Mark Wahlberg as chief brand officer.
Co-founder Adam Gilchrist resigned from the board on 21 April 2023. He had previously stepped down as CEO in July 2022.
Dowd – an early investor in F45 – succeeded outgoing interim CEO, Ben Coates, who stepped in on Gilchrist's resignation.
BACKGROUND
F45 was valued at US$1.4bn following its IPO in June 2021 and the company was riding high in mid-2022 with plans to grow the portfolio to 10k locations, announcing a series of initiatives to sell franchises to a wide variety of markets, including military veterans, hotels and corporates
It also brought in David Beckham and other brand ambassadors, such as Cindy Crawford, in 2021, but these deals turned bad as promised payments were not made and Beckham and others brought legal actions for recovery, draining F45's cash resources.
By the end of July 2022 it was issuing profit warnings, cutting headoffice headcount and ending its relationship with Gilchrist. In October 2022 it had received an unsolicited offer from Kennedy Lewis Investment Management of US$385m.
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