Crunch, a New York-based fitness club chain, has agreed to be acquired by its senior secured lenders, Angelo, Gordon & Co. and New Evolution Fitness Co. The acquisition will occur via a voluntary, pre-packaged Chapter 11 bankruptcy process that allows other interested parties to submit buyout bids.
Crunch announced today that it has reached an agreement to be acquired by its senior secured lenders, New Evolution Fitness Company (“NEFC”) and certain investing affiliates of Angelo, Gordon & Co. NEFC was founded by Mark Mastrov and Jim Rowley and provides capital, management oversight, and expertise to emerging fitness companies around the world. Mr. Mastrov, a 25 year industry visionary and developer of some of the world’s most renowned fitness brands, is best known for founding and growing 24 Hour Fitness into one the largest and most successful fitness companies in the world. Mr. Rowley is a veteran US Marine, former 24 Hour Fitness senior executive, successful leader and long-time fitness professional. Mr. Mastrov and Mr. Rowley will serve as Chairman and Vice Chairman of the Board of Directors of Crunch, respectively, [upon completion of the sale], overseeing the existing senior management team of Crunch which will remain with the Company.
To effect the transaction, Crunch has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. The sale will be accomplished through a bankruptcy process that permits other interested parties to make competing offers. Subject to the approval of the Bankruptcy Court and other customary conditions, the sale is expected to close in approximately 60 days.
“This process of reorganization, along with the ongoing involvement of NEFC, will allow Crunch to emerge as a strong player focused on what we have become famous for: being the place where entertainment meets fitness,” said Tim Miller, CEO of Crunch. “This transaction will allow us to restructure our balance sheet and close several unprofitable locations. Mark Mastrov and Jim Rowley strongly believe in Crunch and I am confident their industry expertise, vision and leadership will prove to be invaluable as we execute our business plan going forward.”
Crunch said that at this time each of its locations will remain open, other than 25 Broadway and 42nd Street in Manhattan, which will close immediately. 25 Broadway members have been transferred to the company’s new location at 90 John Street, and 42nd Street members will have their memberships transferred to 38th Street or another location of their choice. The company said it has secured sufficient capital to fund operations through its reorganization.
“The NEFC team is excited to be part of the new ownership group of Crunch. I have always considered Crunch to be one of the most innovative and cutting edge brands in the health and fitness industry since its inception in 1989,” said Mr. Mastrov. “I look forward to working with Tim Miller and the entire Crunch management team in growing the Crunch brand, while continuing to deliver the fitness industry’s most unique offerings to our members.”
New Evolution Fitness Company
Based in Northern California, New Evolution Fitness Company (NEFC) is a private equity firm focused on the Health and Fitness industry, providing capital and operating partnerships, management oversight, and expertise to emerging brands around the world. NEFC was founded by Mark Mastrov, an industry visionary and developer of some the world’s most successful fitness brands and Jim Rowley, veteran US Marine, successful leader and long time fitness professional.
Angelo, Gordon & Co. was founded in 1988 and has approximately $15 billion under management. Currently, the firm’s investment disciplines encompass four main areas: (i) distressed debt and leveraged loans, (ii) real estate, (iii) private equity and special situations and (iv) a number of credit oriented hedge fund strategies.
Crunch is a collection of state-of-the-art health clubs that believes in making serious exercise fun by pioneering a philosophy of entertainment and fitness. Headquartered in New York City, Crunch serves its members with gyms in New York, Miami, San Francisco, Los Angeles, Chicago, and Atlanta. Renowned for creating unique programming that caters to an exceedingly diverse membership, Crunch has raised the bar for the entire fitness industry.