The Gym Share Discussion Threads

[shakespeare4] 18/4/2020 18:51

The governments about restruants and pubs regarding the use of toilets in public and private establishments give some cause for concern

[masurenguy] 17/4/2020 13:52

Some variation in the latest broker forecasts although how they can provide any meaningful projections, when we still have no idea how soon they can reopen and what decline (if any) in the number of users may be, is just beyond me !

GYM The Gym Group. Berenberg: Buy 220
GYM The Gym Group. Liberum Capital: Buy 300
GYM The Gym Group. Peel Hunt: Buy 300

[masurenguy] 17/4/2020 10:43

17 April 2020
The Gym Group PLC

Results of the Placing

The Gym Group plc, the nationwide operator of 179 low cost 24/7, no contract gyms, announces the successful completion of the placing announced yesterday. A total of 27,396,606 new ordinary shares of 0.01p each in the capital of the Company have been placed by Numis Securities and Peel Hunt, at a price of 150p per Placing Share (the "Placing Price"). Together, the Placing and Subscription of 27,512,181 new Ordinary Shares raised gross proceeds of approximately £41.3m. The Placing Price represents a discount of 6.8% to the closing share price of 161p on 16 April 2020. The Placing Shares and Subscription Shares (defined below) being issued represent together approximately 19.9% of the existing issued ordinary share capital of the Company prior to the Placing and Subscription.

Overview (16 April)

-- The net proceeds of the Placing and Subscription will be used to strengthen TGG's balance sheet and provide liquidity whilst TGG's gyms are closed during this period of unprecedented COVID-19 disruption

-- The Board believes that a strengthened balance sheet will enable the Company to take advantage of growth opportunities in the immediate aftermath of the COVID-19 crisis both in terms of membership acquisition and by restarting its site roll out programme

-- Credit approval has been received for an amendment to the Company's existing £70m committed bank facility, maturing October 2023, with its existing lenders HSBC, Natwest and Banco de Sabadell to provide commitments for an incremental £30m for an 18 month period (the "New Debt Facility"). The amendment which remains subject to final documentation, provides for a revised financial covenant testing regime and is subject to completion of the Placing

-- The Board is confident that the additional financing from the Placing and Subscription and New Debt Facility, alongside a broad range of cost saving actions, will ensure sufficient liquidity even in the event of its most pessimistic trading scenario

-- Directors and certain members of the Executive Management team intend to subscribe for Subscription Shares to contribute approximately £175k in aggregate.

Rationale for the Placing

The Company entered 2020 following a year of strong performance in 2019, and trading in January and February of 2020 was encouraging with the Group reaching record membership numbers of 891,000 at the end of February. However, in line with UK Government guidelines in response to COVID-19, on 20 March 2020 the Company temporarily closed all 179 of its sites.

As announced on 19 March 2020, in anticipation of potential closures, management put in place a number of actions to reduce cash outgoings including halting the roll out of new sites and reducing both capital and operating expenditure to essential spend only. The Company also commenced discussions with its existing lenders HSBC, Natwest and Banco de Sabadell (the "Banks"). These discussions have progressed such that credit approval has been received for an amendment to its existing £70m committed bank facility, maturing October 2023, to provide additional commitments of £30m for an 18 month period. The amendment also provides for a revised financial covenant testing regime, taking into account the current period of closure of the Company's gyms and their reopening over the next six months, and remains subject to final documentation and completion of the Placing. During the period that the New Debt Facility can be accessed the payment of dividends requires the consent of the Banks.

The Company has also continued to take further actions to conserve cash. This has involved ongoing discussions with the Company's landlord, supplier and employee stakeholders. In addition, the executive directors have taken a material temporary reduction in salaries and have deferred 50% of their 2019 bonus award. All non-executive Board members have agreed to forego their board fees for the second quarter of 2020. The Company is also participating in a number of the relevant UK Government COVID-19 support initiatives announced to date, including rates relief, the Coronavirus Job Retention Scheme for furloughed workers, and the deferral of some payments due to HMRC. As at 31 March 2020, the Company had cash on hand of £22.4m, having fully drawn its £70m existing bank facility. Management's immediate mitigation actions have in aggregate reduced the Company's monthly cash burn during the temporary closure period to £5m, excluding the unwind of working capital and other capital commitments over the next five months, which in total are approximately £12m.

Given the uncertainty of the duration of the current disruption, the Board believes the Placing and Subscription to be a prudent measure to further strengthen the Company's balance sheet, working capital and liquidity position. The Board is confident that the steps being taken will ensure sufficient liquidity even in the event of its most pessimistic trading scenario which assumes a total closure of the estate for the remainder of 2020 and a significantly reduced membership upon reopening. The Board also believes that the strengthened balance sheet will provide the Company with the ability to take advantage of growth opportunities in the immediate aftermath of the COVID-19 crisis both in terms of membership acquisition and by restarting its site roll out programme.

[dtaliadoros] 14/4/2020 10:14

Suprised this are still holding at these levels given the continuation of lock down, zero revenue and prospect of landlords suing for rent.

[porsche1945] 08/4/2020 12:34

Lame the company have not put out a statement. Need to know the numbers, zero income so whats still going out? Will they do as asos and others have done this morning and sell more shares into the market, a possible dilution coming up. UK totally screwed, weak from the brexit fiasco and now this, ftse 350 the worst of all markets, as usual.

[quepassa] 07/4/2020 13:49

Re 581.

A far better way to secure the fortunes of The Gym Group in these troubled times.

Offer 10,000 unique one-time only LIFETIME MEMBERSHIPS for £9,995.

When David Lloyd was in its infancy many moons ago and was tight of cash, they did this with great success. The members who readily bought these one-off lifetime memberships generally consider them as the best investment they ever made.

Amongst Gym Group's 800,000 members, there would surely be 1% wealthy enough to lap up such an offer.

ALL IMO. DYOR.
QP

[quepassa] 07/4/2020 09:07

An opportunity for Gym Group in difficult times.

The publicly traded bonds of arch-rival Pure Gym (6.375% Pinnacle BidCo 02/25 ISIN XS1756633126 on the Boerse Berlin) are now trading at c. 66% of par.

You own the debt, you own the company??


ALL IMO. DYOR.
QP

[ronwilkes123] 06/4/2020 18:22

Asking for voluntary monthly payments now due to public messages of support

[manuelbeanster] 01/4/2020 17:56

Bigboots, isn't Pure Gym highly leveraged? What do you mean by "they do not need it"? thanks

[blueball] 28/3/2020 08:58

Tipped by MF at 250p on 1st March what idiots they are.

[bigboots] 26/3/2020 07:56

We own a number of sites that PURE operate from. They have requested to hold back paying rent for the foreseeable future

With their cash balances, we have told them quite categorically that we will not accept their request

It seems that they are jumping on the bandwagon of the support given from the Government when they do not need it

PURE leave this money for businesses who do !!

[dtaliadoros] 25/3/2020 00:19

Not sure how these have managed to bounce 30 percent given that as things stand gym has zero income and no idea as to how long these will stay shut.

[supercity] 23/3/2020 12:54

My gym emailed to say they are closing for now and will not be taking any payments for the time they are shut - have to say regular gym goers will flock back once they open again

[markwell] 23/3/2020 12:53

Why should anyone trust you?

[ronwilkes123] 23/3/2020 12:23

Trust me plenty losing jobs will just cancel a membership when there is no contract Discretionary spending goes first

[robizm] 23/3/2020 11:05

Something tells me you have never been to a gym. Trust me plenty cannot wait to get back

[onjohn] 20/3/2020 22:48

lots of empty gyms, people cancelling and many wont come back

borderline bust

[quepassa] 20/3/2020 22:00

528 and 551 refer.

Good Luck ALL


It is informative to examine yesterday's full figures and ACCOUNTS. In particular, Gym's outgoings/amounts due such as Admin Expenses and Bank Interest, Trade and Other Payables etc etc.

Of course, in normal times, these would just be part of normal cash-flow.

All leisure sector businesses have generally been closed down by HMG for a protracted period. No-one can guess for how long.

It is nonetheless by no means clear to me that the very substantial and welcome government support measures so far announced would however cover the majority business liabilities for every business.

Some long-standing businesses may have accumulated more fat to help them weather lean times. Other businesses which may still be in the growth phase may have fewer reserves to fall back upon.

The government has additionally announced helpful, if not vital, business loan facilities being made available at attractive rates, although such loans would need to be repaid and will impact gearing and gearing ratios.

In the case of The Gym Group, one notes that the recent figures to 31/12/19 released yesterday reveal Current Assets of some £12m against Current Liabilities approaching £50m. It is interesting in this regard perhaps to consider the Quick Ratio or "Acid Test".

It is not clear to me what insurance Gym Group has, if any, to cover Business Disruption of this nature for an extended period.

The final two paragraphs on Page 20 of yesterday's Accounts under the rubric of "2. Basis of preparation" make for informative reading and offers perhaps both some encouragement and some doubt in equal measure.

It is also interesting to consider the next paragraph in this same section on page 21 which contains the following words which must be carefully read in their full and proper context:


"The Directors have concluded that the potential impact of the Covid-19 pandemic described above and uncertainty over possible mitigating actions represents a material uncertainty that may cast significant doubt on the Group and Company’s
ability to continue as a going concern. Nevertheless, having assessed the combination of these various options and the impact of a potential liquidity shortfall in the event of a longer period of impact from the Covid-19 pandemic the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next 12 months".


Of course yesterday, when this was released, gyms were still open for business. Today gyms have been closed.


Whilst one can but wildly guess, it would seem not unlikely that when life eventually normalises, that many smaller/mid-size leisure sector businesses may or may not require recapitalisation by way of issuing new equity whether in the form of (rescue) rights issues or issuing new equity to third parties. Both of which would lead to inevitable shareholder dilution.

Good Luck to Gym Group and to shareholders.

ALL IMO. DYOR.
QP

[squitter] 20/3/2020 19:22

Eeep. And there I was, congratulating myself on my timing, at picking up some shares at the bottom of the dip today.

[ronwilkes123] 20/3/2020 19:07

Subscriptions frozen I've had an email

[pugugly] 20/3/2020 18:11

Now formally shut down for an indefinate period but massive Gov supportg to subsidise staff wages and rates - so far as newsflow goes at the moment NO RELIEF against lease charges - Investors I suggest need an announcement from the company of an estimated cost per ongoing month during shutdown - Subscriptions of course will need to be extended foc for the period of the shutdown.

Could it be that those buying today will have caught the proverbial falling knife or will they be like the wise virgins and filled their lamp with vast quantites of pent up consumer demand that will light up their lives when (and that IS A BIG WHEN) life gets back to the old normal.