Life Time Group Holdings, Inc. (NYSE:LTH), a leading operator of membership sports and recreation clubs, has entered into a definitive agreement on Tuesday, November 5, 2024, for a private offering of $500 million in Senior Secured Notes due 2031. The company's indirect subsidiary, Life Time, Inc., issued the notes with a 6.000% interest rate, payable semi-annually, and maturing on November 15, 2031.
The notes are guaranteed by LTF Intermediate Holdings, Inc., the direct parent of the issuer, and certain of the Issuer's domestic restricted subsidiaries. The indenture, dated November 5, 2024, includes provisions that restrict the issuer's ability to incur additional debt, pay dividends, or make certain other financial transactions.
In addition to the notes offering, Life Time Group Holdings amended its existing credit agreement, introducing a New Term Loan Facility amounting to $1 billion, maturing in 2031. The amended credit facility features an interest rate based on the Secured Overnight Financing Rate plus a margin of 2.50%, which may decrease depending on the company's credit rating.
The notes and the related guarantees were offered to qualified institutional buyers and non-U.S. persons in compliance with the Securities Act of 1933, as amended. These securities have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States without registration or an exemption from registration requirements.
This financial maneuver is part of Life Time Group Holdings' broader strategy to manage its capital structure and secure long-term financing. The company's actions reflect its ongoing efforts to optimize its financial position.
The information in this article is based on a press release statement from Life Time Group Holdings, Inc. and the related SEC filing.
In other recent news, Life Time Group Holdings Inc (NYSE:LTH) showed robust growth in its third-quarter 2024 earnings. The fitness center operator reported adjusted EBITDA of $180.3 million, surpassing both Goldman Sachs' projection and the consensus estimate. Life Time Group's total revenue for the quarter increased by 18.5% year-over-year to $693.2 million, which was also higher than the expected figures from Goldman Sachs and consensus.
The revenue growth was attributed to a 12.1% rise in comparable center revenue. Following the strong quarterly performance, Life Time Group's management has revised its full-year 2024 guidance for adjusted EBITDA to between $658 million and $662 million. Similarly, the company has raised its revenue forecast for the full year to a range of $2.595 billion to $2.605 billion.
In addition to the impressive financial results, Life Time Group also unveiled plans for strategic expansion, intending to open 10 to 12 new locations in 2025. Despite some inconsistencies in performance across clubs and delays in projected openings, the company maintained a strong membership retention rate above 70%. These recent developments suggest a positive outlook for Life Time Group, as the company continues to focus on delivering high-quality member experiences and maintaining sound financial management.
InvestingPro Insights
Life Time Group Holdings' recent $500 million Senior Secured Notes offering and $1 billion New Term Loan Facility align with the company's significant debt burden, as highlighted by InvestingPro Tips. This financial strategy may be aimed at managing the company's capital structure, potentially addressing the fact that short-term obligations currently exceed liquid assets.
Despite the debt concerns, InvestingPro data shows that Life Time Group has demonstrated strong revenue growth, with an 18.12% increase in the last twelve months as of Q3 2024. The company's EBITDA also grew by 27.3% during the same period, reaching $599.91 million. These positive financial indicators suggest that Life Time Group is generating cash to service its debt obligations.
Investors should note that while the company is trading at a high earnings multiple with a P/E ratio of 33.1, it's also trading at a low P/E ratio relative to near-term earnings growth, as indicated by InvestingPro Tips. This could suggest potential value for investors looking at the company's future prospects.
For those interested in a deeper analysis, InvestingPro offers 11 additional tips for Life Time Group Holdings, providing a more comprehensive view of the company's financial health and market position.
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