Sports Club sells $2 million preferreds in private placement to help fund coupon payment

New York, Sept. 20 - The Sports Club Co. Inc. said it issued $2 million of preferred stock in a private placement to help fund the $5.6 million coupon payment on its senior secured notes.

The preferreds were sold to three existing shareholders, D. Michael Talla, Rex A. Licklider and affiliates of Kayne Anderson Capital Advisors, on Sept. 14. Licklider is the chief executive officer, and all the purchasers are either board members or have a representative on the board.

The preferred pays an annual dividend of 11.375%. The dividend is cumulative and can be paid in kind at the company's option. The securities are redeemable from May 31, 2006 onwards at par and putable from May 31, 2006 onwards at par if holders of at least 50% of the preferreds exercise the option.

The Los Angeles operator of sports and fitness centers also announced Monday that is has hired investment bank Barnett & Partners LLC to evaluate strategic alternatives.

The alternatives could include the sale of one or more of the company's operating assets.

The Sports Club said it has received a number of non-binding indications of interest for some of its assets.

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