Bally gets required default waiver, forbearance agreement consents from 10½%, 9 7/8% noteholders

By Caroline Salls

Pittsburgh, May 15 - Bally Total Fitness Holding Corp. has received limited default waiver and forbearance agreements from the required number of holders of its 10½% senior notes due 2011 and its 9 7/8% senior subordinated notes due 2007 in connection with the company's failure to file its 10-K for fiscal 2006 and 10-Q for the first quarter of 2007 and non-payment of interest on its senior subordinated notes.

According to a company news release, noteholders will waive the defaults arising from the delayed financial filings and missed interest payment and forbear from exercising any related remedies until July 13.

Bally's credit agreement waiver and forbearance agreement with advisers for an informal committee of noteholders required forbearance arrangements be in place with holders of a majority of the senior notes and at least 75% of the senior subordinated notes by May 14.

The company said holders of more than 80% of both the senior notes and the senior subordinated notes signed forbearance agreements with the company.

"With these collective arrangements now in place, we can continue to focus on completing the company's 2006 financial statements and negotiating a consensual restructuring to de-lever the company's balance sheet and establish a strong and stable financial foundation for Bally Total Fitness," chief restructuring officer and interim chairman Don R. Kornstein said in the release.

As previously reported, Bally agreed to pay a one-time cash consent fee of $1.25 per $1,000 principal amount of notes to holders of its 10½% senior notes that executed the limited waiver and forbearance agreement by 5 p.m. ET on May 14.

Holders of roughly 80% of the company's 9 7/8% senior subordinated notes agreed to execute the forbearance agreement without any consent payment if forbearance agreements were executed by a majority of senior noteholders.

Bally is a Chicago-based fitness center operator.

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