Planet Fitness, Inc. Completes Refinancing Transaction

Rhea-AI Summary

Planet Fitness (PLNT) has completed its refinancing transaction, issuing $800 million in Class A-2 Senior Secured Notes. These notes are divided into two tranches: $425 million at a 5.765% fixed interest rate for five years, and $375 million at a 6.237% fixed interest rate for ten years.

The proceeds will repay $591 million of 2018-1 Class A-2-II Notes, cover transaction costs, fund reserve accounts, and support general corporate purposes, including potential share repurchases. As of March 31, 2024, Planet Fitness had 19.6 million members and 2,599 stores worldwide.

Positive

• Completed refinancing transaction providing $800 million in capital.
• Refinancing replaces $591 million of existing debt, potentially improving financial flexibility.
• New notes offer fixed interest rates of 5.765% and 6.237% which could be favorable compared to variable rates.
• Proceeds also earmarked for general corporate purposes, including share repurchases, which may positively impact stock price.
• Planet Fitness has a large member base with 19.6 million members and 2,599 stores, indicating strong market presence.

Negative

• Issuance of new debt increases overall liabilities by $209 million (new $800 million vs. old $591 million).
• Fixed interest rates of 5.765% and 6.237% could be high compared to current market rates, potentially increasing interest expenses.
• Refinancing transaction involves paying transaction costs, which may impact short-term cash flow.
• Potential risk associated with the use of proceeds for share repurchases, which might not provide immediate tangible business benefits.

Insights

Financial Analyst

The refinancing transaction completed by Planet Fitness involves the issuance of $800 million in new securitized notes to replace a previous debt of $591 million. The refinancing offers a strategic advantage by potentially lowering interest expenses and extending debt maturities, contributing to better financial stability. The fixed interest rates of <5.765%> and <6.237%> for the five-year and ten-year notes respectively are notable, especially in a fluctuating interest rate environment. Reallocating the remaining funds to corporate purposes and possible share repurchases signals confidence in the company's future cash flows and earnings potential. Investors should consider the impact of these fixed interest expenses on the company's profitability and assess whether the new rates offer a favorable spread compared to the previous debt obligations.

Rating: 1

Market Research Analyst

Planet Fitness's decision to refinance aligns with their broader market strategy to maintain a competitive edge in the fitness industry. By choosing fixed rates, the company mitigates the risk associated with variable interest rates, ensuring predictable financial planning over the medium to long term. This move could be seen as a proactive measure to manage financial health, which is important given the economic uncertainties impacting many sectors. Another key aspect to consider is the mention of possible share repurchases, a tactic often used to signal confidence from management and potentially increase shareholder value. Investors should weigh these actions in the context of Planet Fitness's overall market positioning and growth trajectory.

Rating: 1

Corporate Finance Expert

This refinancing transaction reflects a robust financial strategy aimed at improving liquidity and optimizing the capital structure. By securing a substantial portion of their debt at fixed rates, Planet Fitness reduces its exposure to interest rate volatility, a significant advantage in the current financial landscape. The move to use some proceeds for general corporate purposes is often a sign of a strong liquidity position, which may support expansion initiatives or operational efficiencies. For retail investors, understanding the implications of these financial maneuvers is crucial; it shows management's dedication to financial prudence and long-term stability. However, the fixed nature of interest expenses should be measured against possible future revenue streams and overall market conditions.

Rating: 1

HAMPTON, N.H., June 12, 2024 /PRNewswire/ -- Planet Fitness, Inc. (NYSE: PLNT) (together with its subsidiaries, the "Company") today announced that it has completed its previously announced refinancing transaction.

The new series of securitized notes (the "2024 Notes") consist of $800 million Class A-2 Senior Secured Notes issued in two tranches: the Class A-2-I Senior Secured Notes with an anticipated repayment date of five years, with a principal amount of $425 million and a fixed interest rate of 5.765% per annum, payable quarterly; and the Class A-2-II Senior Secured Notes with an anticipated repayment date of ten years, with a principal amount of $375 million and a fixed interest rate of 6.237% per annum, payable quarterly.

The proceeds from the placement of the 2024 Notes will be used as follows:

• to repay in full the Series 2018-1 Class A-2-II Notes, which as of March 31, 2024, had a principal balance of approximately $591 million;
  
  
• to pay the transaction costs and fund the reserve accounts associated with the securitized financing facility; and
  
  
• for general corporate purposes, which may include funding share repurchases by the Company.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the 2024 Notes or any other security. The 2024 Notes to be offered have not been, and will not be, registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933.

About Planet Fitness

Founded in 1992 in Dover, NH, Planet Fitness is one of the largest and fastest-growing franchisors and operators of fitness centers in the world by number of members and locations. As of March 31, 2024, Planet Fitness had approximately 19.6 million members and 2,599 stores in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia. The Company's mission is to enhance people's lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone®. More than 90% of Planet Fitness stores are owned and operated by independent business men and women.

Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include the Company's statements with respect to the expected use of proceeds from the sale of the Class A-2 Notes, potential share repurchases and other statements, estimates and projections that do not relate solely to historical facts. Forward-looking statements can be identified by words such as "believe," "expect," "goal," "plan," "will," "prospects," "future," "strategy" and similar references to future periods, although not all forward-looking statements include these identifying words. Forward-looking statements are not assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company's control. Actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results to differ materially include risks and uncertainties associated with the Company's ability to consummate the refinancing transaction on terms acceptable to the Company or at all, capital markets conditions, the Company's substantial increased indebtedness as a result of the transaction and its ability to incur additional indebtedness or refinance that indebtedness in the future, the Company's future financial performance and the Company's ability to pay principal and interest on its indebtedness, competition in the fitness industry, the Company's and franchisees' ability to attract and retain members, the Company's and franchisees' ability to identify and secure suitable sites for new franchise stores, changes in consumer demand, changes in equipment costs, the Company's ability to expand into new markets domestically and internationally, operating costs for the Company and franchisees generally, availability and cost of capital for franchisees, acquisition activity, developments and changes in laws and regulations, our substantial increased indebtedness as a result of our refinancing and securitization transactions and our ability to incur additional indebtedness or refinance that indebtedness in the future, our future financial performance and our ability to pay principal and interest on our indebtedness, our corporate structure and tax receivable agreements, failures, interruptions or security breaches of the Company's information systems or technology, general economic conditions and the other factors described in the Company's annual report on Form 10-K for the year ended December 31, 2023, the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2024, as well as the Company's other filings with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in forward-looking statements, investors should not place undue reliance on forward-looking statements, which reflect the Company's views only as of the date of this press release. Except as required by law, neither the Company nor any of its affiliates or representatives undertake any obligation to provide additional information or to correct or update any information set forth in this release, whether as a result of new information, future developments or otherwise. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

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SOURCE Planet Fitness, Inc.

FAQ

What does the Planet Fitness refinancing transaction involve?

Planet Fitness (PLNT) completed a refinancing transaction involving $800 million in Class A-2 Senior Secured Notes issued in two tranches with fixed interest rates.

How will the proceeds from Planet Fitness's new notes be used?

The proceeds will be used to repay $591 million of existing debt, cover transaction costs, fund reserve accounts, and support general corporate purposes including share repurchases.

What are the details of the new notes issued by Planet Fitness?

Planet Fitness issued $425 million in notes with a 5-year term at 5.765% interest and $375 million in notes with a 10-year term at 6.237% interest.

How many members and stores does Planet Fitness have as of March 2024?

As of March 31, 2024, Planet Fitness had approximately 19.6 million members and 2,599 stores.