Planet Fitness Prices $800 Million Securitized Financing Facility

Rhea-AI Summary

Planet Fitness (NYSE: PLNT) has announced the pricing of $800 million in Series 2024-1 Class A-2 Fixed Rate Senior Secured Notes. These notes are split into two tranches: $425 million with a 5.765% interest rate over five years, and $375 million with a 6.237% interest rate over ten years. The notes, issued by Planet Fitness Master Issuer , will repay $591 million in 2018-1 Class A-2-II Notes, cover transaction costs, and fund general corporate purposes, including potential share repurchases. Closing is expected around June 12, 2024, subject to conditions.

Positive

• Pricing of $800 million in secured notes enhances financial liquidity.
• Class A-2-I Notes have a competitive interest rate of 5.765% over five years.
• Class A-2-II Notes offer a fixed interest rate of 6.237% over ten years.
• Proceeds will repay $591 million of existing debt, improving debt structure.
• Funds can be used for share repurchases, potentially benefiting shareholders.

Negative

• High debt issuance may increase financial leverage.
• Fixed interest rates of 5.765% and 6.237% may be high in a low-interest-rate environment.
• No assurance of the transaction closing, adding uncertainty.
• High transaction costs could impact net proceeds.

Financial Analyst

Planet Fitness's recent announcement to price $800 million of Series 2024-1 Class A-2 Fixed Rate Senior Secured Notes is a significant financial maneuver. This transaction has two tranches with different maturity periods and interest rates: the Class A-2-I Notes with a five-year term at 5.765% and the Class A-2-II Notes with a ten-year term at 6.237%. The primary use of proceeds will be to repay the existing Series 2018-1 Class A-2-II Notes, reducing the company's debt burden from approximately $591 million. This refinancing strategy indicates the company's intent to optimize its capital structure by locking in fixed interest rates, potentially lower than future market rates, which hints at an environment of anticipated rising interest rates.

From a financial perspective, this move may enhance the company's liquidity and flexibility for future growth initiatives, including share repurchases. For investors, it's important to consider the impact of these fixed rates on Planet Fitness's long-term debt obligations and interest expenses, as well as the overall effect on the company's profitability and cash flow.

The successful completion of this securitization transaction would likely be seen positively by the market, providing stability and potentially improving the company's credit profile. However, the reliance on debt markets for funding could be perceived as a risk if the interest rate environment shifts unfavorably.

Market Research Analyst

Planet Fitness's decision to utilize proceeds from the securitized financing for general corporate purposes, including potential share repurchases, reflects a strategic effort to boost shareholder value. The execution of share buybacks can be a signal of confidence by the management in the company's future prospects and an effort to return capital to shareholders.

From a market standpoint, this move may positively influence the stock price in the short term by reducing the number of shares outstanding, which could lead to an increase in earnings per share. Additionally, the repayment of existing notes will likely improve the company’s debt profile, positioning it for more aggressive expansion or other strategic initiatives.

Investors should closely monitor how Planet Fitness executes its planned initiatives post-transaction closure. The company's ability to effectively utilize the funds for growth and shareholder returns will be a key driver of its stock performance. However, potential risks include the execution risk associated with the closing of the transaction and how changes in the macroeconomic environment may impact future financing costs.

HAMPTON, N.H., June 7, 2024 /PRNewswire/ -- Planet Fitness, Inc. (NYSE: PLNT) (together with its subsidiaries, the "Company") today announced that it has priced $800 million of Series 2024-1 Class A-2 Fixed Rate Senior Secured Notes (the "Class A-2 Notes"), which consist of two tranches: the Class A-2-I Senior Secured Notes with an anticipated repayment term of five years, with an aggregate 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 term of ten years, with an aggregate principal amount of $375 million and a fixed interest rate of 6.237% per annum, payable quarterly. The Class A-2 Notes are expected to be issued by Planet Fitness Master Issuer LLC (the "Master Issuer"), a limited-purpose, bankruptcy remote, indirect subsidiary of Planet Fitness, Inc. in a privately placed securitization transaction.

The proceeds from the expected sale of the Class A-2 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.

The Company expects the Class A-2 Notes transaction to close on or around June 12, 2024, subject to satisfaction of various closing conditions. There can be no assurance regarding the timing of closing or that the sale of the Class A-2 Notes will be completed.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the Class A-2 Notes or any other security. The Class A-2 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 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 "anticipate," "expect," "intend," "may," "will," 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, 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.

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SOURCE Planet Fitness, Inc.

FAQ

What is the value of Planet Fitness's new securitized financing facility?

Planet Fitness has priced $800 million in Series 2024-1 Class A-2 Fixed Rate Senior Secured Notes.

What are the interest rates for the new Planet Fitness notes?

The Class A-2-I Notes have a 5.765% interest rate, and the Class A-2-II Notes have a 6.237% interest rate.

How will Planet Fitness use the proceeds from the new notes?

Proceeds will repay $591 million of existing debt, cover transaction costs, and fund general corporate purposes, including potential share repurchases.

When is the expected closing date for the Planet Fitness notes transaction?

The transaction is expected to close around June 12, 2024, subject to conditions.

What is the principal amount of Planet Fitness's Class A-2-I Notes?

The Class A-2-I Notes have an aggregate principal amount of $425 million.