Life Time Announces Pricing of Upsized Private Offering of $500 Million of Senior Secured Notes Due 2031

Rhea-AI Summary

Life Time Group Holdings (NYSE: LTH) announced the pricing of an upsized private offering of $500 million in senior secured notes due 2031, increased from the initially planned $400 million. The notes will carry a 6.000% interest rate paid semi-annually. Concurrently, the company plans to secure a $1,000 million new term loan facility maturing in 2031. The proceeds will be used to refinance existing debt, including the 5.750% Senior Secured Notes and 8.000% Senior Notes due 2026, and repay revolving credit facility loans. The offering is expected to close on November 5, 2024.

Positive

• Successful upsizing of note offering from $400M to $500M indicates strong investor demand
• Lower interest rate of 6.000% on new notes compared to existing 8.000% notes suggests improved borrowing terms
• Extended debt maturity to 2031 improves debt structure

Negative

• Taking on significant new debt of $1.5B combined ($500M notes + $1B term loan)
• Additional interest expense burden from new debt obligations

Insights

Financial Analyst

This refinancing announcement represents a significant financial restructuring for Life Time, with several positive implications. The upsized $500 million senior secured notes offering at 6.000% interest, combined with a new $1 billion term loan facility, demonstrates strong market confidence in the company's credit profile. The refinancing package effectively addresses near-term debt maturities and potentially reduces interest expenses through the new term loan's favorable SOFR + 2.50% pricing structure.

The strategic use of proceeds to retire higher-cost debt (5.750% and 8.000% notes) while maintaining liquidity through the revolving credit facility shows prudent balance sheet management. This restructuring provides Life Time with enhanced financial flexibility and an improved debt maturity profile extending to 2031, supporting their growth initiatives across their 175+ athletic club portfolio.

CHANHASSEN, Minn., Oct. 23, 2024 /PRNewswire/ -- Life Time Group Holdings, Inc. (NYSE: LTH) ("Life Time" or the "Company") announced today that its indirect subsidiary, Life Time, Inc. (the "Issuer"), priced its previously announced private offering (the "Offering") of $500 million in aggregate principal amount of 6.000% senior secured notes due 2031 (the "Notes"). The Offering was upsized from $400 million to $500 million in aggregate principal amount. The Notes will pay interest on a semi-annual basis. The Offering is expected to close on November 5, 2024, subject to customary closing conditions.

Concurrently with the closing of the Offering, the Issuer intends to amend its existing credit agreement to incur new term loans maturing in 2031 in an aggregate principal amount of $1,000 million (the "New Term Loan Facility" and, together with the Offering, the "Refinancing") and amend certain other provisions of its existing credit agreement. Borrowings under the New Term Loan Facility will bear interest at a rate per annum of the Secured Overnight Financing Rate plus an applicable margin of 2.50% (subject to a certain ratings-based step-down).

The Issuer intends to use the net proceeds from the Refinancing and cash from its balance sheet to fund the satisfaction and discharge of the Issuer's 5.750% Senior Secured Notes due 2026 and 8.000% Senior Notes due 2026, as well as pay related fees and expenses. The additional proceeds from the increased aggregate principal amount of the Notes will be used to repay a corresponding amount of loans drawn under the Issuer's revolving credit facility.

Erik Weaver, Executive Vice President and Chief Financial Officer, stated: "We are pleased with this Refinancing. We believe the pricing and terms reflect the strength of our credit profile. With this objective now met, we look forward to taking advantage of the opportunities and growth ahead."

The Notes will be guaranteed on a senior secured basis by LTF Intermediate Holdings, Inc., the direct parent of the Issuer, and each of the Issuer's existing and future wholly owned domestic restricted subsidiaries that guarantees its New Term Loan Facility, subject to certain exceptions. The Notes and the related guarantees thereof will be offered in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not been registered under the Securities Act or any state securities laws and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No assurance can be made that the Offering or the other refinancing transactions will be consummated on their proposed terms or at all.

About Life Time
Life Time (NYSE: LTH) empowers people to live healthy, happy lives through its portfolio of more than 175 athletic country clubs across the United States and Canada. The health and wellness pioneer also delivers a range of healthy way of life programs and information via its complimentary Life Time Digital app. The Company's healthy living, healthy aging, healthy entertainment communities and ecosystem serve people 90 days to 90+ years old and are supported by a team of more than 41,000 dedicated professionals. In addition to delivering the best programs and experiences through its clubs, Life Time owns and produces nearly 30 of the most iconic athletic events in the country.

Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking statements, including with respect to the proposed Refinancing (including the consummation thereof). Management has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While they believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond management's control. These statements involve risks and uncertainties that may cause Life Time's actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and, except as required by law, Life Time assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

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SOURCE Life Time Group Holdings, Inc.

FAQ

What is the interest rate on Life Time's (LTH) new senior secured notes?

The new senior secured notes due 2031 carry a 6.000% interest rate, payable semi-annually.

How much did Life Time (LTH) increase its note offering from the initial amount?

Life Time increased the offering from $400 million to $500 million, representing a $100 million upsize.

When will Life Time's (LTH) new senior secured notes offering close?

The offering is expected to close on November 5, 2024, subject to customary closing conditions.

What is the total refinancing amount for Life Time (LTH) including the term loan?

The total refinancing amount is $1.5 billion, consisting of $500 million in senior secured notes and $1 billion in new term loans.