Topnotch Health Clubs, the fitness and leisure company buckling under the weight of its debts, yesterday sold six clubs for £3.5m to appease its bankers.
The disposals included the sale of one of the company's best gyms in Blackfriars in central London for £1 to the private group Vision Fitness.
Vision bought Espree Leisure, a subsidiary of Topnotch and owner of its Blackfriars and Royal Mint Court sites, for the nominal sum. Royal Mint Court, also in London, has already closed down.
Vision Fitness bought a further four Topnotch gyms for £3.5m. After transferring liabilities, the total cash payable to Topnotch is £2.1m.
Topnotch is left with 13 clubs, once the landlords approve the sale of clubs in Brentford, New Malden, Maidstone and Colchester.
The four gyms have assets of about £4.7m and contributed £539,000 to the company's operating profits last year.
Vision Fitness has also taken on £350,000 of outstanding liabilities from Espree Leisure. Royal Mint Court and Blackfriars last year made an operating loss of £10,000, but have a book value estimated at £315,000.
Matthew Harris, its chief executive, founded Topnotch with one health club in Middlesex in 1991. It floated on the Alternative Investment Market in 2000. Shares hit a level of more than 200p that year before sliding almost continuously since.
Last year the company was forced to admit in October that its commitments to open a number of new clubs were causing it huge financial strain. A decline in demand for fitness clubs left Topnotch with heavy losses and the company had breached its banking covenants.
Shares have collapsed to 3.6p and the company's market capitalisation is now just £590,000. Many other companies in the sector are also struggling to compete in a leisure sector downturn.
Mr Harris said yesterday: "Trading conditions remain difficult in the sector and the group continues to trade at a loss. We are close to concluding new arrangements with our bankers and the proceeds from this sale will be used to reduce debt."
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