Equinox Seeks Delay on Promise to Backstop SoulCycle’s Debt

Equinox Holdings Inc. is seeking to rework some of its debts less than a month before the gym chain faces a deadline to cover a loan owed by its SoulCycle subsidiary.

Equinox, the luxury fitness chain backed by billionaire Stephen Ross’s Related Cos., is in talks with HPS Investment Partners, the lender that provided a credit facility to SoulCycle, according to people with knowledge of the matter. Equinox previously said it would guarantee part of Soul Cycle’s credit line of about $265 million, and struck a forbearance deal with HPS last May amid the spreading pandemic to delay the deadline until Feb. 15.

A potential new agreement would push out the deadline again, said the people, who asked not to be identified discussing a private matter. The precise terms, which could involve injecting new money, are still in flux, but an accord could come as soon as next week, the people said.

Representatives for Equinox and HPS, which are both based in New York, declined to comment.

Debt Buyback

Equinox’s guarantee originally required it to buy back at least part of SoulCycle’s obligations when the spin studios’ debt relative to earnings exceeded certain thresholds. In an assessment last June, S&P Global Ratings said another Related Cos. affiliate had agreed to contribute $125 million to help cover Equinox’s guarantee, but said the sum might not be enough.

“We would view any further deferrals beyond Feb. 15, 2021, as tantamount to a default,” S&P said at the time.

The entire fitness industry is reeling from forced closures tied to the pandemic. Chains including Gold’s Gym International Inc., 24 Hour Fitness Worldwide Inc. and the owner of New York Sports Clubs sought bankruptcy protection last year.

Like its rivals, Equinox has been hampered by lockdowns and social distancing rules that limit visitors and operating hours. New York has allowed gyms to reopen with those safeguards, while SoulCycle has been allowed to resume operations in some cities and is conducting outdoor classes elsewhere.

Equinox started as a single fitness club in New York’s Upper West Side and has grown to more than 100 gyms globally, according to its website. Locations include Los Angeles, Miami and San Francisco and the company also operates brands including Blink Fitness, Precision Run and Pure Yoga, which permanently closed at least one location in Manhattan.

The privately held chain also received a minority investment in 2017 from L Catterton, a consumer-focused private equity firm. Price quotes on the fitness company’s $1.02 billion loan due 2024 have hovered around 90 cents on the dollar.

Equinox is getting advice from law firm Kirkland & Ellis as well as investment bankers at Centerview Partners, Bloomberg reported in October. Lenders to the company organized and hired lawyers at Akin Gump Strauss Hauer & Feld.

©2021 Bloomberg L.P.

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