Bally Total Fitness Corp. said it began seeking approval from noteholders for its prepackaged bankruptcy reorganization plan..
It set a deadline of July 27 for the vote, being taken among holders of 10-1/2% senior notes due 2011, and 9-7/8% senior subordinated notes due 2007.
The Chicago-based operator of fitness centers said it plans to continue normal club operations at its more than 375 clubs during the solicitation period. If the necessary votes aren’t received, it would evaluate other options, including filing a traditional, non-prepackaged Chapter 11 case, Bally said.
Last week Bally said that holders of a majority of its senior notes, and more than 80% of its senior subordinated notes, had agreed to vote in favor of the reorganization plan employing a prepackaged Chapter 11 filing.
The plan is designed to enhance liquidity by increasing the rights offering to $90 million, and by allowing the company to retain the cash that would have been used for the July 15, 2007, interest payment due on the senior notes.
The company said the restructuring will reduce the principal outstanding on the notes by $150 million by exchanging all existing paper for a new class of subordinated notes, common equity and the right to participate in a $77.5 million rights offering.
“We are pleased that so many of our noteholders have expressed support for the Plan and look forward to executing it and emerging promptly from Chapter 11 protection,” said Don R. Kornstein, interim Chairman and chief restructuring officer, in a statement. “The restructuring process laid out in the Plan will allow us to maximize our resources and enhance our capital structure, better enabling us to invest in our clubs to meet the needs of our members and thereby facilitate operating performance improvements.”