Crunch Fitness Seeks to Borrow $800 Million in ABS Bond Sale

Crunch Fitness is looking to raise about $800 million from a bond sale backed by the company’s franchise revenue, adding to a string of companies tapping the whole-business securitization market in recent weeks. The financing would include $650 million of bonds with an average life of about five years marketed to institutional investors, a $100 million privately placed note that can be drawn at a later date, and a $50 million variable funding facility.

• Early price discussions on the five-year bonds are for spreads of 2.3 to 2.5 percentage points over benchmark rates.
• The plans and details haven’t been finalized and may still change.

A comparison for Crunch’s proposed pricing can be made with Planet Fitness Inc.’s securitized debt. The company completed an $825 million whole business securitization last year, including $400 million of bonds with an average life of about five years, which priced at 1.60 percentage points over benchmark rates.

Purpose Brands, a company whose holdings include health club brands Orangetheory Fitness and Anytime Fitness, sold a $715 million whole-business securitization in March. It’s securities with an average life of 4.8 years were sold at a yield of 3 percentage points over benchmarks.

Crunch, founded in 1989 in New York, sold itself to private equity firm TPG in 2019. Leonard Green & Partners last year acquired a majority interest. The deal would come amid a pickup in whole-business securitization activity.