CHANHASSEN, MN - Life Time Group Holdings, Inc., a leader in membership sports and recreation clubs, announced today that it has upsized its private offering of senior secured notes to $500 million, a significant increase from the initially proposed $400 million. The notes, bearing an interest rate of 6.000%, are due in 2031 and will be issued by Life Time, Inc., an indirect subsidiary of the company.
The offering, which was priced today, is expected to close on November 5, 2024, subject to customary closing conditions. In conjunction with the notes offering, Life Time, Inc. also plans to amend its existing credit agreement to acquire new term loans totaling $1,000 million, maturing in the same year as the notes.
The proceeds from this refinancing initiative will be used to fully retire the issuer's existing 5.750% Senior Secured Notes and 8.000% Senior Notes, both due in 2026. The additional funds from the upsized offering will be allocated to repay a portion of the loans drawn under the issuer’s revolving credit facility.
The notes will be guaranteed by LTF Intermediate Holdings, Inc., the direct parent of Life Time, Inc., and certain subsidiaries. This transaction is aimed at optimizing the company's capital structure and reducing future interest expenses.
These securities will be offered to qualified institutional buyers and non-U.S. persons in transactions exempt from registration under the Securities Act of 1933. The notes and their guarantees have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the U.S. without registration or an applicable exemption.
Life Time Group Holdings, Inc. advises that this announcement does not constitute an offer to sell the notes and is not a solicitation for an offer to buy. The completion of the offering is not guaranteed and is dependent on market and other conditions.
In other recent news, Life Time Group Holdings, Inc. has been making significant strides in its financial performance and strategic initiatives. The company's third-quarter results surpassed expectations, with an 18.5% year-over-year revenue increase to $693 million and adjusted EBITDA rising by 26% to $180 million. This strong performance falls in line with the company's plans to refinance its 2026 debt.
Life Time has also launched a private offering for $400 million in senior secured notes due 2031, part of a broader refinancing strategy. This move is backed by guarantees from Life Time's direct parent company, LTF Intermediate Holdings, Inc., and certain subsidiaries.
In addition, BofA Securities has maintained a Buy rating for Life Time, following the company's robust third-quarter results. The firm has also adjusted its full-year 2024 adjusted EBITDA estimate for Life Time upward from $650 million to $655 million.
Furthermore, Life Time announced its plan to launch a public offering of 12 million shares of common stock, with Morgan Stanley and BofA Securities serving as the lead active book-running managers. This is part of a broader strategy to potentially repay debt.
Finally, Life Time has expanded its offerings in the growing sector of pickleball, a move recognized by BofA Securities, which raised its price target for the company to $30.00.
InvestingPro Insights
Life Time Group Holdings' decision to upsize its private offering of senior secured notes aligns with several key financial metrics and trends highlighted by InvestingPro. The company's revenue growth of 17.97% over the last twelve months and 18.88% in the most recent quarter demonstrates a robust expansion trajectory, potentially justifying the increased debt offering to fuel further growth.
InvestingPro Tips reveal that Life Time "operates with a significant debt burden," which is consistent with the company's move to refinance and restructure its debt through this new offering. The upsized notes and planned term loans suggest that the company is leveraging its strong market position, as evidenced by its "trading near 52-week high" status.
Additionally, Life Time's EBITDA growth of 39.49% in the last twelve months indicates improving operational efficiency, which could support the company's ability to service the new debt. However, investors should note that the stock is "trading at a high earnings multiple," which may reflect market optimism about the company's growth prospects.
For a more comprehensive analysis, InvestingPro offers 13 additional tips for Life Time Group Holdings, providing deeper insights into the company's financial health and market position.
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