As a result of the global economic downturn caused by the COVID-19 pandemic, franchise operators of all sizes are facing a crisis. Lower revenues have forced layoffs and caused balance sheet pressures. Reduced economic activity is forcing these companies to rethink their debt strategy. At the same time, others are looking to heed Sir Winston Churchill’s famous advice to “never let a good crisis go to waste.”
This was exactly the situation faced by a large Anytime Fitness franchisee. The owners had goals to accelerate growth via acquisition, however COVID got in the way by restricting access to debt capital – naturally just as the pandemic caused the opportunity set to improve! Unfortunately, their existing lender simply didn’t have the risk appetite.
That’s when this franchisee reached out to Corlex Capital, in partnership with ApplePie Capital, to assist with refinancing $60 million in existing debt and securing access to an acquisition line of $40 million. Despite the risks of operating gyms in a pandemic while executing an aggressive growth strategy, Corlex found the risk taker in the market and brought forth a financing solution that included optimal debt restructuring terms, as well as access to the additional capital needed to make acquisitions.
Restructuring and the Risk Takers
Whether a borrower is looking to play offense or defense, debt restructuring has numerous benefits. The process is designed to ease financial burdens, provide breathing room to support operations, and even create opportunity. But to get a deal done in a tough market, it’s important to look for the risk takers.
This is Corlex’s specialty. Because we are in constant communication with all sorts of lenders, we uniquely understand who the risk takers are and which banks or alternative lenders to approach in any economic cycle with any type of deal. Our responsible relationships with financing providers across the capital structure enable Corlex to have a pulse on the types of investments each firm is actively pursuing at any given time.
Regardless of what is going on in the market, there is always someone willing to finance a deal at the right price with the right structure.
There is always someone willing to finance a deal at the right price with the right structure.
Getting Deals Funded
There are three keys to getting debt restructuring deals funded:
- Cultivate responsible relationships with a wide array of lenders.
- Gain an impartial, holistic understanding of the commercial position of each stakeholder.
- Creatively approach complex structures and legal documentation.
Anytime Fitness Gym
Corlex’s strengths in these areas, plus our analytical capabilities and hands-on approach, enable us to manage all aspects of debt restructuring transactions from start to finish. Through the experience and expertise of Corlex, our clients are able to implement effective debt restructurings to improve value, relieve financing pressures, and exploit opportunities.
Post-closing, our Anytime Fitness client is now ready to acquire additional franchisees and already has several targets under letter of intent.