Distressed debt funds called in for Fitness First

Oaktree and Marathon now own more than 75% of the gym operator's debt and will seek a debt-for-equity swap, which would make them majority shareholders, and underwrite new borrowing of up to £100m, according to reports.

BC Partners declined to comment on the matter.

The international gym chain began talks with its lenders in January to restructure its £600m high interest loans, following BC Partners' cancellation of plans to float the health club operator's Asian and Australian branches last year due to market volatility.

In early February this year, the private equity firm axed the Fitness First core management team in a bid to save the firm, appointing a new chief executive, chief financial officer and head of the UK division. Chris Stone, the newly appointed CEO, is known for his turnaround of private equity-backed Northgate Information Solutions.

Consumer austerity and the emergence of low-cost competitors have been cited as the reasons behind the fitness chain's poor results.

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• United Kingdom