Moody’s rates Life Time Fitness debt B1, Caa1

Moody's Investors Service said it assigned Life Time Fitness, Inc. a corporate family rating of B2, probability of default rating of B2-PD, senior secured debt of B1 and senior unsecured (guaranteed) debt of Caa1.

The outlook is stable.

On March 16, affiliates of Leonard Green & Partners, TPG Capital and other investors including founder and CEO Bahram Akradi announced that they would purchase the company in a leveraged buyout. The purchase price of the equity, repayment of existing debt and transaction-related fees and expenses totaling about $3.8 billion will be provided by the new rated debt, sponsor and management equity and the proceeds of a sale-leaseback transaction.

Moody’s said the B1 rating on the senior secured term loan due 2022 reflects the probability of default rating of B2-PD, an overall loss assumption of 50% of all debt at default and the term loan's position at the top of the debt capital structure senior to the senior unsecured notes due 2023, trade payables and operating lease obligations, which together provide first-loss support, and pari passu with the unrated $250 million senior secured revolving credit facility due 2020 and about $261 million of mortgage debt (unrated).

The Caa1 rating assigned to the senior unsecured notes due 2023 also reflects the probability of default rating and its first-loss position at the bottom of the debt capital structure, the agency said.

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