Lenders to high-end gym chain Equinox Holdings Inc. have organized and hired a law firm to help protect their holdings as the company seeks to shore up its finances amid the pandemic, Bloomberg News reported. Investors holding close to a majority of Equinox’s roughly $1 billion loan brought in legal advisers from Akin Gump Strauss Hauer & Feld and are in the process of adding more lenders to the group. The New York-based gym operator is facing a February 2021 deadline to repurchase certain debt tied to its SoulCycle spin studio chain. It’s also been hampered by lockdowns and social distancing measures that place limits on visitors and operating hours at certain locations. SoulCycle has been allowed to resume operations in some cities and is conducting outdoor classes elsewhere. In May, Equinox received an amendment allowing it to delay repurchasing some of SoulCycle’s debt until next year, according to S&P Global Ratings. Equinox had guaranteed the SoulCycle borrowings in a deal that normally required it to buy back the obligations when the spin studios’ debt relative to earnings exceeded certain thresholds. HPS Investment Partners is the SoulCycle lender and provided the forbearance. S&P said that it viewed the amendment as tantamount to default. In February, Equinox will have to buy back enough debt to reduce SoulCycle’s debt relative to earnings to below five times, the credit grader said in a June report. Equinox has been burning cash and is expected to have elevated debt relative to earnings after it was forced to close locations to help stem the spread of Covid-19, S&P said. In June, the gym chain took on a new $150 million loan that ranks equal with its $1 billion obligation in line for repayment.
