Holmes Place, the fitness club operator that has issued five profits warnings in less than 12 months, prepared to limp away from the public arena yesterday after clinching a takeover deal worth only 25p-a-share.
The group, which came close to agreeing a 200p-a-share deal with rival Cannons last autumn, is being bought by Bridgepoint and Permira, two private equity houses. It warned investors that without a sale, it was in effect insolvent.
The deal, which reunites Holmes Place with its original backer, Bridgepoint, ends a catalogue of woes for the health club chain that started last July when Allan Fisher, the group's chief executive and co-founder, put the business up for sale. The group has been dependent on its bankers since January, when it first breached its financial covenants.
Mr Fisher, who would have netted £21m from the Cannons deal, will make £2.54m from the sale, while Lawrence Alkin, his co-founder and a non-executive director, will make £4.06m instead of £32m under the Cannons deal. Both are understood to be investing their windfalls in the delisted business. The existing management will hold 5 per cent.
Charlie Troup, a partner at Permira, said he saw opportunities to expand Holmes Place in Europe over the next few years. The private equity groups are investing £130m of equity, of which £87m will go towards slashing the company's £185m debt mountain.
Yesterday's deal comes hot on the heels of a £204m management buyout at Fitness First. It leaves LA Fitness, worth £31m, as the only significant listed operator.