Town Sports International Holdings, Inc. (NASDAQ:CLUB) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
Flywheel Acquisition
On January 6, 2020, Town Sports International, LLC (“TSI”), a wholly owned subsidiary of Town Sports International Holdings, Inc. (the “Company”), entered into an asset purchase agreement (the “Purchase Agreement”) with Flywheel Sports, Inc., Flywheel Buckhead LLC, Flywheel Astor Place LLC, Flywheel CCDC, LLC, Flywheel Park Avenue LLC, Flywheel Williamsburg LLC, Flywheel San Francisco, LLC, Flywheel Denver Union Station, LLC and Flywheel 415 Greenwich LLC (collectively, the “Sellers”). to the Purchase Agreement, TSI has agreed to purchase substantially all of the assets of the Flywheel studio business of the Sellers and assume certain liabilities of the Sellers relating to such studio business (the “Acquisition”). As consideration for the Acquisition, TSI will issue a promissory note to the Sellers in the principal amount of $25 million (the “Seller Note”).
The Acquisition is subject to a number of closing conditions that must be satisfied prior to the closing date of the Acquisition, as detailed in the Purchase Agreement, which include, among other things, (i) the refinancing of TSI’s existing senior secured credit facility on terms and condition satisfactory to TSI in its sole discretion and to Kennedy Lewis Investment Management, LLC (“KLIM”), and (ii) the consummation of the Second Lien Facility (as defined below) with KLIM. In addition, the Purchase Agreement contains certain termination rights of TSI and of the Sellers, including, among others, TSI’s right to terminate for any reason on or before the fifteenth business day following TSI’s receipt of all schedules of the Sellers required under the Purchase Agreement. The Purchase Agreement also contains customary representations, warranties, covenants and indemnifications by the Sellers and TSI as well as other customary provisions for a transaction of this nature.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference. We have included the Purchase Agreement to provide investors and stockholders with information regarding its terms, but not to provide any other factual information about the Company, TSI or any of the Sellers. The Purchase Agreement contains representations and warranties that the parties to the Purchase Agreement made to and solely for the benefit of each other, and the assertions embodied in such representations and warranties are qualified by information contained in confidential disclosure schedules that the parties exchanged in connection with signing the Purchase Agreement. Accordingly, investors and stockholders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, since they were only made as of the date of the Purchase Agreement and are modified in important part by the underlying disclosure schedules.
Second Lien Secured Term Loan Commitment Letter
On January 6, 2020, the Company entered into a commitment letter (the “Commitment Letter”) to which KLIM has committed to provide, subject to the terms and conditions set forth in the Commitment Letter, a second lien secured term loan in an aggregate principal amount of $50 million (the “Second Lien Facility”), $25 million of which will be funded by KLIM in cash (the “Cash Commitment”) and $25 million of which will be a conversion of the Seller Note. The proceeds of the Cash Commitment will be used, in part, to repay existing indebtedness of the Company. The Second Lien Facility is subject to the consummation of the Acquisition and other customary closing conditions.
The foregoing description of the Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the full text of the Commitment Letter, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
On January 6, 2020, the Company issued a press release announcing the entry into the Purchase Agreement. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
(d) Exhibits.
| 2.1 | Asset Purchase Agreement, dated January 6, 2020, among Town Sports International, LLC and Flywheel Sports, Inc., Flywheel Buckhead LLC, Flywheel Astor Place LLC, Flywheel CCDC, LLC, Flywheel Park Avenue LLC, Flywheel Williamsburg LLC, Flywheel San Francisco, LLC, Flywheel Denver Union Station, LLC and Flywheel 415 Greenwich LLC.* |
| 10.1 | $50,000,000 Second Lien Secured Term Loan Commitment Letter, dated January 6, 2020, between Town Sports International Holdings, Inc. and Kennedy Lewis Investment Management LLC. |
| 99.1 | Press Release, dated January 6, 2020. |
* We have omitted certain schedules and exhibits to this agreement in accordance with Item 601(b)(2) of Regulation S-K, and we will supplementally furnish a copy of any omitted schedule and/or exhibit to the Securities and Exchange Commission upon request.
TOWN SPORTS INTERNATIONAL HOLDINGS INC Exhibit
EX-2.1 2 ex21to8k11125019_01062020.htm Exhibit 2.1 ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (the “Agreement”) is made as of the 6th day of January,…
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About Town Sports International Holdings, Inc. (NASDAQ:CLUB)
Town Sports International Holdings, Inc. (Town Sports) is an owner and operator of fitness clubs in the Northeast and Mid-Atlantic regions of the United States. The Company, through its subsidiaries, operates over 150 fitness clubs (clubs) and approximately three BFX Studio (studio) locations. The Company’s operating segments include New York Sports Clubs (NYSC), Boston Sports Clubs (BSC), Philadelphia Sports Clubs (PSC), Washington Sports Clubs (WSC), Swiss Sports Clubs and BFX Studio. It owns and operates over 105 clubs under the NYSC brand name within New York City, including in approximately 40 locations in Manhattan. It owns and operates approximately 30 clubs in the Boston region under BSC brand name, over 10 fitness clubs in the Washington, District of Columbia region under WSC brand name, and approximately five clubs in the Philadelphia region under PSC brand name. In addition, it owns and operates approximately three fitness clubs in Switzerland.