Fitness First seeks £75m to fund club expansion plans
The health club operator Fitness First announced plans to raise £75m yesterday to fund its ambitious plans of opening 80 new clubs a year over the next eight years.
The company, which has raised some £80m since its 1996 flotation, said the new cash combined with debt would support its club opening plans for another four years. After that, it believed it could continue its strategy of spending about £100m on 80 new clubs a year without having to raise fresh funds.
"What we want to do is open about 80 clubs a year and we want to get to a stage where we can fund them ourselves without going back to shareholders. This [fundraising] is the last time," Mike Balfour, the chief executive, said.
The move came as the company reported a 60 per cent jump in pre-tax profits before goodwill amortisation for the year ending 31 October, to £20.6m. Sales were £133.1m, up from £65.3m a year earlier.
It also said the current financial year had started "well" and its prospects for the year as a whole looked "most encouraging" with demand for its clubs remaining "buoyant".
Shares in the company, which currently has 225 clubs across Europe, closed up 7.5p at 450p.
It is carrying out its fundraising through a placing of 18.75 million shares, equal to 19 per cent of its current equity, which will be voted on by shareholders at an extraordinary meeting on 25 February. Investors will be able to apply for the new shares in an open offer on a one-for-10 basis at the offer price of 412p. Mr Balfour said the exercise had already been 2.5 times oversubscribed.
Fitness First, which aims to have more than 800 clubs by the end of the decade, opened 85 fitness clubs last year bringing the total to 200. It has since opened another 25 and expects to have 280 by the end of October.
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