Weightlifting: Virgin Active shareholders ‘set to inject’ £65m to see firm through pandemic
Virgin Active shareholders are considering plans to inject £65m into the global gym chain as treadmills stand still during the pandemic, according to reports.
Investors have tabled a proposed rescue package to lenders and landlords that would see them providing millions in funding over the next few months, Sky News reported.
Landlords will likely be asked to take significant rent cuts as part of the deal, while lenders may be asked to contribute towards Virgin Active’s turnaround.
The £65m injection is understood to be made up of new money from shareholders and an extension of the brand royalty fee deferrals initially agreed after the first national lockdown last spring.
South African investment group Brait holds an 80 per cent stake in the gym business. Brait bought its stake from Sir Richard Branson’s Virgin Group and investor CVC in 2015, leaving Branson with 20 per cent and valuing the business at £1.3bn.
Virgin Active sites, including gyms in Broadgate, Cannon Street and Fenchurch Street, have been shuttered since mid-December in line with coronavirus restrictions.
The company was forced to take an additional loan of £25m in June 2020, which was matched by a £20m capital contribution from shareholders and a £5m deferral of licence fees.
The firm has struggled under lockdown restrictions in the UK, where it employs around 2,400 people and operates more than 40 sites.
Virgin Active operates 240 gyms around the world in total, including sites in Europe, Asia, South Africa and other African countries.
The company has frozen UK membership fees during the enforced closures and slashed senior pay as it grapples with widespread closures.
In a statement issued earlier this month, the gym group said it had had a strong balance sheet before the crisis, and that refinancing plans had put it on “a sound footing”.
“We are now managing the further impact from this evolving situation around the world, including second lockdowns in the UK and Italy,” it said.
“We are in discussions with all our stakeholders, and with their support we look forward to getting back to business as usual across all our territories, enabling the business to benefit from global trends towards health and wellness which are accelerating as a result of the pandemic.”
Virgin Active could not be reached for comment.