S&P rates Patchell, loans CCC+

S&P said it rated Patchell Holdings Inc. and the loans through its subsidiary GoodLife Fitness Centres Inc. CCC+. The recovery ratings on the loans are 3, indicating meaningful (50%-70%; rounded estimate: 55%) recovery in default. The outlook is positive.

“PHI should maintain adequate liquidity to fund capital expenditure investments for the next 12 months but we believe meaningful cash deficits will continue. We believe that fiscal 2022 EBITDA (S&P Global Ratings' adjusted) and operating cash flows will be lower than pre-pandemic levels. In addition, we assume that PHI will incur capital expenditure (capex) over the next 12 months to support development of new clubs and maintenance of existing clubs,” the agency said in a press release.

The loan ratings are for a C$625 million senior secured term loan and a C$75 million delayed-draw revolver.

“The positive outlook reflects our expectation that the company's membership revenues and EBITDA should steadily improve in the next year as operations normalize following the lifting of restrictions. As a result, we expect leverage will improve to the mid-6x area by fiscal 2022 and further improve to 5x in fiscal 2023,” S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.