David Llloyd – the Health Club gym chain part-owned by Lloyds Banking Group – potential sale as part restructuring.

Go to article

Posted December 5, 2011 7:24 pm by

David Llloyd – the Health Club gym chain part-owned by Lloyds Banking Group – potential sale as part restructuring.

Lloyds is understood to be intent on restructuring the finances of the business, which has ballooned into the bank’s second largest corporate debt exposure.

As part of any deal to sell David Lloyd, chief executive Scott Lloyd could launch a bid for the rival raquet business owned by Virgin Active.

Lloyds, 41pc owned by the British taxpayer, is also assessing whether it can write down part of the £1.3bn of debt across the property arm and operating division of the group.

The gym chain also has a costly interest rate swap the company signed up to when it was bought from Whitbread in 2007. In December 2010 the loss on the swap was already more than £169m.

David Lloyd was bought for £940m in May 2007 at the height of the private equity bubble. Scott Lloyd headed a London & Regional-led swoop on the business, which had been founded by his father, the Davis Cup captain, 26 years earlier.

Related Links

You might like:
  • British Triumph that reveals a weakness02 Dec 2011(Telegraph Finance)
  • Eurozone debt crisis: it’s fiscal union or bust, says Pimco03 Dec 2011(Telegraph Finance)
  • Bank of England in crackdown on bankers’ bonuses03 Dec 2011(Telegraph Finance)
 
  

 

From the Web

FORM THE WEB

:
  • Which Nations Will Have to Go Bankrupt?01 Nov 2011(BBC Business Video)
  • The Biggest Generation in America is Retiring31 Dec 1969(Prudential)
  • RBS Financial to settle with state for $52 million28 Nov 2011(Boston Business Journal)

As part of the acquisition, London & Regional’s Next Generation chain of gyms was rolled into David Lloyd and the business was divided into an operating company and a property division.

The deal shared ownership between management, including Mr Lloyd, and London & Regional, the property company of the Livingstone brothers, which was later bought by Lloyds. A month after the deal completed, the debt markets collapsed and HBOS was left unable to syndicate the debt – leaving it over-exposed to the company.

In July last year, 70pc of Lloyds’ equity stake in David Lloyd was transferred to private equity firm Coller Capital, with the bank retaining 30pc, in a vehicle known as Caird Capital. Caird and management still own a 45pc equity stake in David Lloyd, while London & Regional owns 55pc. Lloyds continues to control all the debt.

< Health Club News home