CHANHASSEN, Minn. - Life Time Group Holdings, Inc. (NYSE: LTH), a health and wellness company, announced the pricing of its upsized private offering of $500 million in senior secured notes due 2031. Initially set at $400 million, the offering was increased due to demand, with the notes carrying an interest rate of 6.000%. The closing of the offering is scheduled for November 5, 2024, contingent on standard closing conditions.
In a related financial strategy, the company's subsidiary, Life Time, Inc., also plans to revise its existing credit agreement to secure new term loans totaling $1,000 million, maturing in 2031. The new term loans will have an interest rate tied to the Secured Overnight Financing Rate plus a margin of 2.50%, which could decrease depending on the company's credit rating.
The proceeds from this refinancing effort will be allocated to fully redeem the issuer's 5.750% Senior Secured Notes and 8.000% Senior Notes, both due in 2026, along with covering related fees and expenses. Any additional funds from the notes offering will be used to repay amounts drawn from the company's revolving credit facility.
Erik Weaver, Life Time's Executive Vice President and Chief Financial Officer, expressed satisfaction with the refinancing terms, attributing them to the company's strong credit profile and looking forward to future growth opportunities.
The notes will be guaranteed by LTF Intermediate Holdings, Inc., the direct parent of the issuer, and by certain subsidiaries, with some exceptions. The offering targets qualified institutional buyers and non-U.S. persons, in compliance with the Securities Act of 1933, as amended, avoiding the need for registration under this act and relevant state laws.
This announcement is not an offer to sell or a solicitation of an offer to buy the notes, and there will be no sale in any jurisdiction where such an offer, solicitation, or sale would be illegal without registration or qualification under the securities laws of that jurisdiction. There is no guarantee that the offering or other refinancing transactions will be completed as proposed or at all.
The information is based on a press release statement.
In other recent news, Life Time Group Holdings, Inc. has made notable strides with its financial performance and strategic initiatives. The company's third-quarter results exceeded expectations, with revenue increasing by 18.5% year-over-year to $693 million, and adjusted EBITDA rising by 26% to $180 million. This strong performance aligns with Life Time's plans to refinance its 2026 debt.
Life Time Group has also upsized its private offering of senior secured notes to $500 million, a significant rise from the initially proposed $400 million. The proceeds from this initiative will be used to retire the issuer's existing 5.750% Senior Secured Notes and 8.000% Senior Notes, due in 2026. This transaction aims to optimize the company's capital structure and reduce future interest expenses.
Moreover, BofA Securities has maintained a Buy rating for Life Time, following the company's robust third-quarter results. The firm has adjusted its full-year 2024 adjusted EBITDA estimate for Life Time upward from $650 million to $655 million. Life Time Group also announced its plan to launch a public offering of 12 million shares of common stock, with Morgan Stanley (NYSE:MS) and BofA Securities serving as the lead active book-running managers.
InvestingPro Insights
Life Time Group Holdings' recent financial maneuvers align with its current market position and financial health. According to InvestingPro data, the company has a market capitalization of $5.32 billion and operates with a significant debt burden, which contextualizes the need for this refinancing effort.
The company's revenue growth of 17.97% over the last twelve months and a quarterly growth of 18.88% in Q2 2024 suggest a robust expansion trajectory, potentially justifying the increased offering size due to investor demand. This growth is further supported by an EBITDA growth of 39.49% over the same period, indicating improving operational efficiency.
InvestingPro Tips highlight that Life Time is trading near its 52-week high, with a strong return over the last three months. The stock has seen a remarkable 81.72% price return over the past year, which may have contributed to the favorable terms of the new debt offering. However, investors should note that the company is trading at a high P/E ratio of 44.83, suggesting a premium valuation.
The refinancing strategy, aiming to redeem existing notes and potentially reduce revolving credit facility usage, appears prudent given the InvestingPro Tip that short-term obligations exceed liquid assets. This move could improve the company's debt profile and financial flexibility.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Life Time Group Holdings, providing deeper insights into the company's financial position and market performance.
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