A restructuring is reportedly on the cards for gym chain Virgin Active, as its owners ponder blueprints to help it weather the coronavirus pandemic.
According to reports by Sky News on Saturday, the chain has brought in about half a dozen banks and advisers to look at how the company could be restructured, as lockdowns hamper its ability to make money.
Richard Branson’s Virgin Group is a minority shareholder in what has grown to be one of the UK’s largest fitness brands.
Gyms have been among the worst hit businesses during the pandemic, and many have been shut for a large portion of the last year, as fears of spreading the virus led to widespread lockdowns.
A booming home workout industry has emerged while gym-goers wait for the green light to return.
Sky reported that it was unclear what the restructuring plans would entail and details were not clear on whether it would be a possible insolvency or company voluntary agreement.
The potential restructuring of Virgin Active will come as no surprise to some. Earlier in January bosses of gyms and fitness firms, including PureGym, gave evidence to a Department for Culture, Media and Sport (DCMS) committee on COVID-19’s impact on the industry. They warned fitness providers were on a financial “cliff edge”
They called for targeted and proportional support for the sector, asking for new legislation to help gyms negotiate the burden of rent arrears, as moratoria wraps up. They also asked for an extension of business rates relief throughout 2021 and VAT relief for the leisure sector akin to that offered to hospitality.
At the time, PureGym managing director Rebecca Passmore told the committee that firms are suffering an “economic long Covid.”
The Gym Group (GYM.L) recently announced that its monthly cash burn during the current COVID-19 lockdown is £5m ($6.8m), while the November closures cost £6m. The group said that 45% of last year’s trading days had been lost due to government restrictions.
Yahoo Finance had not received a response to requests for comment from Virgin Active at the time of publication.
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