JOHANNESBURG (Reuters) – Virgin Active’s UK business will get an additional 45 million pounds ($62.7 million) in funding from the fitness chain’s shareholders as part of a restructuring, its majority owner, investment firm Brait SE, said on Thursday.
Shares in Brait, which holds just under 80% of Virgin Active, had soared 17.65% by 0944 GMT, putting the group on track for its biggest daily rise in more than three months.
Virgin Active Europe has been significantly affected by the ongoing COVID-19 pandemic, with government-imposed shutdowns forcing the temporary closure of gyms in all of the countries in which it operates.
By the end of Feb. 2021, its UK clubs had been closed or partially closed for nine of the previous 12 months and its clubs in Italy had been closed for over six months, Brait said.
Given the impact of the pandemic on Virgin Active Europe’s revenues, management made numerous moves to preserve cash, such as rent reductions in Italy, Australia, Thailand, Singapore and to a lesser extent the UK.
It also got government support, furloughed over 95% of its UK staff, imposed salary reductions, cut capital expenditure and operational costs, and agreed revised payment terms with suppliers.
But despite these measures, the continued impact of the pandemic into 2021 resulted in the need for a holistic restructuring of the Virgin Active UK business, Brait said.
The plan also involves amendments and extensions to the terms of its senior debt by lenders, such as accessing additional facilities of up to 50 million pounds, and landlord concessions with respect to rental arrears, future rental agreements and guarantees, it added.
In 2020, Virgin Active Europe’s revenues fell by 49% which resulted in a loss before interest, tax, depreciation and amortization of about 42 million pounds, versus a profit of 57 million pounds in 2019. It lost 25% of its membership base.
($1 = 0.7175 pounds)
(Reporting by Nqobile Dludla in Johannesburg and Aby Jose Koilparambil in Bengaluru; Editing by Anil D’Silva and Jan Harvey)