tv3
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-3
FOR APPLICATION FOR QUALIFICATION OF INDENTURE
UNDER THE TRUST INDENTURE ACT OF 1939
Bally Total Fitness Holding Corporation
(Name of Applicant)
8700 West Bryn Mawr Avenue
Chicago, Illinois
(Address of principal executive office)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
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Title of Class
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Amount |
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13-5/8% Subordinated Notes
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$80,000,000 |
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
On, or as soon as practicable following the Effective Date of the Applicants Joint
Prepackaged Chapter 11 Plan of Reorganization.
Marc D. Bassewitz
Senior Vice President, Secretary and General Counsel
8700 West Bryn Mawr Avenue
Chicago, Illinois 60631
(773) 399-7606
(Name and address of agent for service)
With a copy to:
Mark D. Gerstein, Esq.
Latham & Watkins LLP
Sears Tower Suite 5800
233 South Wacker Drive
Chicago, Illinois 60606
(312) 876-7700
GENERAL
Item 1. General Information
(a) Bally Total Fitness Holding Corporation (the Company) is a Delaware corporation.
Item 2. Securities Act Exemption Applicable
As described in the disclosure statement (the Disclosure Statement) with respect to the
proposed joint prepackaged Chapter 11 plan of reorganization of the Company and its affiliate
debtors (the Plan), a copy of which is filed as Exhibit T3E(1) to this Form T-3, the Company will
issue up to $80,000,000 of 13-5/8% Subordinated Notes (the New Subordinated Notes) under an
indenture to be qualified hereby (the New Subordinated Notes Indenture) to holders of the
Companys existing 9-7/8% Senior Subordinated Notes due 2007 (the Prepetition Senior Subordinated
Notes), who will receive their pro rata share of the New Subordinated Notes, 13-5/8% Junior
Subordinated Notes, new common stock in the Company and rights to purchase 13-5/8% Senior
Subordinated Notes.
The Company has determined to solicit pre-petition acceptances of the Plan. However, a
bankruptcy case has not been commenced as of the date of this filing. In the event that the Plan is
approved and the New Subordinated Notes are exchanged for Prepetition Senior Notes pursuant to the
Plan, the issuance of the New Subordinated Notes would be exempt from registration under the
Securities Act of 1933, as amended (the Securities Act), pursuant to the exemption provided by
Section 1145(a)(1) of Title 11 of the United States Bankruptcy Code. To the extent that the
solicitation of acceptances of the Plan constitutes an offer of new securities not exempt from
registration under Section 1145 (a)(1), the Company will also rely on Section 3(a)(9) of the
Securities Act and Section 4(2) of the Securities Act and, to the extent applicable, Regulation D
promulgated thereunder.
Generally, Section 1145(a)(1) exempts an offer and sale of securities under a plan of
reorganization from registration under the Securities Act and state securities laws if three
principal requirements are satisfied: (i) the securities must be offered and sold under a plan of
reorganization and must be securities of the debtor, an affiliate participating in a joint plan
with the debtor or a successor to the debtor under the plan; (ii) the recipients of the securities
must hold a prepetition or administrative expense claim against the debtor or an interest in the
debtor; and (iii) the securities must be issued entirely in exchange for the recipients claim
against or interest in the debtor, or principally in such exchange and partly for cash or property.
The Company believes that the offer of the New Subordinated Notes under the solicitation of
acceptances for the Plan and the exchange of New Subordinated Notes for Prepetition Senior
Subordinated Notes under the Plan will satisfy the requirements of Section 3(a)(9) of the
Securities Act and Section 1145(a)(1) of the Bankruptcy Code, respectively, and, therefore, such
offer and exchange is exempt from the registration requirements referred to above.
No sales of securities of the same class as the New Subordinated Notes have been or are to be
made by the Company by or through an underwriter at or about the same time as the solicitation of
acceptances and exchange for which the exemption is claimed. No consideration has been, or is to
be, given, directly or indirectly, to any person in connection with the transaction, except for
customary payments to be made in respect of (1) preparing, printing and mailing the Disclosure
Statement and related documents, (2) the engagement of MacKenzie Partners, Inc., as voting agent
for the solicitation of pre-petition acceptances of the Plan and (3) payments of the fees and
expenses of the Companys legal and financial advisors. Neither the voting agent nor the companys
financial advisors will solicit acceptances in connection with the Companys solicitation of
approval for the Plan or make recommendations as to acceptance or rejection of the Plan. The
compensation payable to the agents and advisors is not conditioned on the acceptance of the Plan.
AFFILIATIONS
Item 3. Affiliates
(a) An organizational chart showing the affiliates of the Company as of the date of this
Application for Qualification on Form T-3 (Application) is attached hereto as Exhibit T3H and is
incorporated herein by reference. Unless otherwise indicated, each subsidiary is wholly owned by
its parent.
The Company expects all of these entities to exist upon consummation of the Plan.
(b) Certain directors and executive officers of the Company may be deemed to be affiliates
of the Company by virtue of their positions with the Company. See Item 4, Directors and Executive
Officers.
(c) Certain persons who may be deemed to be affiliates of the Company by virtue of their
holdings of the voting securities of the Company. See Item 5, Principal Owners of Voting
Securities.
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MANAGEMENT AND CONTROL
Item 4. Directors and Officers
The following table lists the name of, and offices held by, each executive officer and
director of the Company. The address of each person listed below is c/o Bally Total Fitness Holding
Corporation, 8700 West Bryn Mawr Avenue, Chicago, Illinois 60631.
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Name |
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Office / Position |
Don R. Kornstein
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Director, Interim Chairman, Chief Restructuring Officer |
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Julie Adams
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Senior Vice President, Membership Services |
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Marc D. Bassewitz
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Senior Vice President, Secretary and General Counsel |
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Ronald G. Eidell
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Senior Vice President, Chief Financial Officer |
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William G. Fanelli
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Senior Vice President, Corporate Development |
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Michael A. Feder
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Chief Operating Officer |
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Gail J. Holmberg
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Senior Vice President, Chief Information Officer |
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Thomas S. Massimino
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Senior Vice President, Operations |
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Harold Morgan
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Senior Vice President, Chief Administrative Officer |
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John H. Wildman
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Senior Vice President, Sales and Interim Chief Marketing Officer |
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Theresa R. Willows
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Senior Vice President, Customer Care and Member Services |
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Charles J. Burdick
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Director |
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Barry R. Elson
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Director |
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Eric Langshur
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Director |
Item 5. Principal Owners of Voting Securities
(a) Voting Securities as of the Date of Application. The following tables set forth certain
information concerning the beneficial ownership of the voting securities of the Company by persons
known by the Company to beneficially own more than 10% of its outstanding voting securities as of
June 30, 2007:
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Percentage of |
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Title of Class |
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Voting Securities |
Name and Complete Mailing Address |
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Owned |
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Amount Owned |
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Owned |
Pardus Capital Management L.P.
1001 Avenue of the Americas, Suite 1100
New York, New York 10018
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Common Stock
Par Value $.01
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6,105,500 shares
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14.8 |
% |
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Emanuel R. Pearlman
Liberation Investment Group LLC
Liberation Investments, Ltd.
Liberation Investments, L.P.
330 Madison Avenue, 6th Floor
New York, NY 10017
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Common Stock
Par Value $.01
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4,619,450 shares
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11.2 |
% |
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(b) Voting Securities as of the Effective Date. The Company expects that, as of the date on
which all conditions to consummation of the Plan have been satisfied or waived (the Effective
Date), Anschutz Investment Company, Goldman Sachs & Co. and funds advised by Tennenbaum Capital
Partners, LLC may each own in excess of 10% of the Companys voting securities.
UNDERWRITERS
Item 6. Underwriters
(a) Within the three years prior to the date of filing this application, no person acted as
underwriter of any securities of the Company which were outstanding as of the date of this
application.
(b) No person is acting as principal underwriter of the securities proposed to be offered
pursuant to the New Subordinated Notes Indenture.
CAPITAL SECURITIES
Item 7. Capitalization
(a) Capitalization as of the Date of Application. The following table sets forth information,
as of June 30, 2007, certain information with respect to each authorized class of securities of the
Company:
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Title of Class |
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Amount Authorized |
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Amount Outstanding |
Common Stock, par value $.01 per share |
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60,200,000 shares |
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41,221,512 shares |
Preferred Stock, par value $.10 per share |
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10,000,000 shares |
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No shares |
Series A Junior Participating Preferred Stock |
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602,000 shares |
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No shares |
Series B Junior Participating Preferred Stock |
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100,000 shares |
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No shares |
10-1/2 % Senior Notes Due 2011 |
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$ |
235,199,000 |
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9-7/8% Series D Senior Subordinated Notes Due 2007 |
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$ |
297,538,000 |
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9-7/8% Series B Senior Subordinated Notes Due 2007 |
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$ |
236,000 |
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The Common Stock of the Company is the only class of voting securities of the Company. Each
share of Common Stock of the Company is entitled to one vote.
(b) Capitalization as of the Effective Date. The following table sets forth, as
of the Effective Date, certain information with respect to each authorized class of securities of the
Company:
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Title of Class |
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Amount Authorized |
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Amount Outstanding |
Common Stock, par value $.01 per share
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450,000 shares
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300,000 shares
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Preferred Stock, par value $.10 per share
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200,000 shares
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No shares
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Title of Class |
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Amount Authorized |
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Amount Outstanding |
12-3/8% Senior Second Lien Notes
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$ |
247,337,500 |
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$ |
247,337,500 |
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13-5/8% Rights Offering Senior Subordinated Notes
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approximately
$90,000,000
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approximately
$90,000,000
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13-5/8% New Subordinated Notes
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approximately
$80,000,000
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approximately
$80,000,000
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13-5/8% New Junior Subordinated Notes
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approximately
$70,000,000
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approximately
$70,000,000
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INDENTURE SECURITIES
Item 8. Analysis of Indenture Provisions
8. ANALYSIS OF INDENTURE PROVISIONS.
The New Subordinated Notes will be subject to the New Subordinated Notes Indenture between the
Company and U.S. Bank National Association, as trustee (the Trustee). The following is a general
description of certain provisions of the New Subordinated Notes Indenture, and the description is
qualified in its entirety by reference to the form of Indenture filed as exhibit T3C herewith.
Capitalized terms used below and not defined herein have the meanings ascribed to them in the New
Subordinated Notes Indenture.
(a) Events of Default; Withholding of Notice of Default.
The occurrence of any of the following events will constitute an Event of Default under the
New Subordinated Notes Indenture: (i) failure to pay any interest on any of the New Subordinated
Notes when due, continued for 30 days; (ii) failure to pay the principal of, or premium, if any, on
the New Subordinated Notes at Maturity; (iii) failure by the Company to comply with certain
covenants and such failure continues for 30 days after notice; (iv) failure by the Company to
comply with certain covenants regarding sales of assets or repurchases of the New Subordinated
Notes upon certain events; (v) default under any indebtedness of the Company or any Subsidiary
which individually or in the aggregate is in excess of $10,000,000 and either (a) is caused by a
failure to pay principal of such indebtedness when due an prior to the expiration of the grace
period provided in such indebtedness or (b) results in the acceleration of such indebtedness; (vi)
failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of
$10,000,000, which judgments are not paid, stayed or otherwise discharged for a period of 60 days;
(vii) the rendering of a decree, judgment or order by a court of competent jurisdiction against the
Company or any of its Significant Subsidiaries under any bankruptcy or similar law which remains
undischarged or unstayed for a period of 60 days; or (viii) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary.
If an Event of Default occurs and is continuing (other than an Event of Default described in
clauses (vii) or (viii) of the preceding paragraph), the Trustee or the Holders of at least 25% in
aggregate principal amount of the outstanding New Subordinated Notes, by a notice in writing to the
Company, may declare the unpaid principal of, and accrued and unpaid interest on, and other
Obligations under, such New Subordinated Notes to be due and payable immediately. Notwithstanding
the foregoing, if an Event of Default related to the Company and described in clauses (vii) or
(viii) of the preceding paragraph occurs, the unpaid principal of, and accrued and unpaid interest
on, and other Obligations under all outstanding New Subordinated Notes will become immediately due
and payable without further action or notice. Any such declaration with respect to the New
Subordinated Notes may be annulled by the Holders of a majority in aggregate principal amount of
the outstanding New Subordinated Notes upon the conditions provided in the New Subordinated Notes
Indenture.
(b) Execution, Authentication, Delivery and Dating; Application of Money Collected.
The New Subordinated Notes may be executed on behalf of the Company by one of its Chairman of
the Board, its President, its Chief Executive Officer, its Chief Financial Officer or one of its
Vice Presidents and attested by its Secretary or one of its Assistant Secretaries. The signatures
of any of these officers on the New Subordinated Notes may be manual or facsimile. Each Guarantor
shall execute a Guarantee in the manner set forth in the New Subordinated Notes Indenture.
Notes bearing the manual or facsimile signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the
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authentication and delivery of such New
Subordinated Notes or did not hold such offices at the date of such New Subordinated Notes
On the Issue Date, the Company may deliver New Subordinated Notes in the outstanding aggregate
principal amount of $80,000,000 executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Notes; and the Trustee in
accordance with such Company Order shall authenticate and make available for delivery such Notes as
provided in the New Subordinated Notes Indenture and not otherwise.
Because the New Subordinated Notes are being issued to holders of the Prepetition Senior
Subordinated Notes, there will be no proceeds from the issuance of the New Subordinated Notes.
(c) Satisfaction and Discharge.
The New Subordinated Notes Indenture will be discharged and cease to be of further effect as
to all of the New Subordinated Notes issued, when (i) either (a) the Company delivers to the
Trustee all outstanding New Subordinated Notes for cancellation or (b) all such New Subordinated
Notes become due and payable, whether at maturity, within one year of maturity or on a redemption
date specified in a proper notice to the Trustee; (ii) the Company has paid or caused to be paid
all amounts payable to discharge the entire Indebtedness, including the principal, premium (if any)
and accrued interest; and (iii) the Company delivers to the Trustee an Officers Certificate and an
Opinion of Independent Counsel, each stating that all conditions have been complied with and such
satisfaction and discharge will not result in a violation of the New Subordinated Indenture.
(d) Statement as to Compliance.
The Company will deliver to the Trustee within 120 days after the end of its fiscal year an
Officers Certificate stating that a review of the activities of the Company during such fiscal
year has been made with a view to determining whether the Company has fulfilled all of its
obligations and is in compliance with all covenants under the New Subordinated Notes Indenture and,
if there has been a Default, specifying each Default and the nature and status thereof. If a
Default or Event of Default occurs and is continuing, the Company will deliver to the Trustee,
within 10 business days after becoming aware of its occurrence, a certificate describing the
Default or Event of Default, its status and what action the Company is taking or proposes to take
with respect thereto.
Item 9. Other Obligors
No person other than the Company is an obligor of the New Subordinated Notes.
Contents of application for qualification. This application for qualification comprises:
(a) Pages numbered 1 to 8, consecutively.
(b) The statement of eligibility and qualification on Form T-1 of U.S. Bank National
Association under the Indenture to be qualified.
(c) The following exhibits in addition to those filed as part of the statement of eligibility
and qualification of such Trustee:
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Exhibit |
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Title |
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Exhibit T3A
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Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Companys
registration statement on Form S-1 filed January 3, 1996,
registration no. 33-99844) |
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Exhibit T3B
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Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3.2 to the Companys Current Report on
Form 8-K, file no. 001-13997, dated May 27, 2005) |
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Exhibit T3C*
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Form of Indenture |
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Exhibit T3D
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Not applicable |
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Exhibit |
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Title |
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Exhibit T3E-1
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Disclosure Statement With Respect to Joint Prepackaged
Chapter 11 Plan of Reorganization of Bally Total Fitness
Holding Corporation and its Affiliate Debtors and Joint
Prepackaged Chapter 11 Plan of Reorganization of the Company
and its Affiliate Debtors (incorporated by reference to
Exhibit 99.2 to the Companys Current Report on Form 8-K,
file no. 001-13997, dated June 27, 2007) |
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Exhibit T3E-2
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Beneficial Owner Ballot for Voting the 9.875% Senior
Subordinated Notes Due 2007, Series B, and the 9.875% Senior
Subordinated Notes Due 2007, Series D, Issued by Bally Total
Fitness Holding Corporation; Beneficial Owner Ballot for
Voting the 10.5% Senior Notes Due 2011 Issued by Bally Total
Fitness Holding Corporation; Master Ballot for Voting the
10.5% Senior Notes Due 2011 Issued by Bally Total Fitness
Holding Corporation; and Master Ballot for Voting the 9.875%
Senior Subordinated Notes Due 2007, Series B, and the 9.875%
Senior Subordinated Notes Due 2007, Series D, Issued by
Bally Total Fitness Holding Corporation (incorporated by
reference to Exhibit 99.3 to the Companys Current Report on
Form 8-K, file no. 001-13997, dated June 27, 2007) |
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Exhibit T3F*
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Cross-reference sheet showing the location in the Indenture
to Section 310 through 318(a), inclusive, of the Trust
Indenture Act |
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Exhibit T3G*
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Form T-1 qualifying U.S. Bank National Association as
Trustee under the New Subordinated Indenture to be qualified
pursuant to this Form T-3 |
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Exhibit T3H*
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Organizational Chart |
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SIGNATURES
Pursuant to the requirements of the Trust Indenture Act of 1939, the Company, Bally Total
Fitness Holding Corporation, a corporation organized and existing under the laws of the State of
Delaware, has duly caused this application to be signed on its behalf by the undersigned, thereunto
duly authorized, and their seal to be hereunto affixed and attested, all in the city of Chicago,
and State of Illinois, on this 23rd day of July, 2007.
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BALLY TOTAL FITNESS HOLDING CORPORATION
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By: |
/s/ Marc D. Bassewitz
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Name: |
Marc D. Bassewitz |
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Its: Senior Vice President, Secretary and General Counsel |
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Attest:
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/s/ Kathleen Boege
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Name: Kathleen Boege |
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Its: Assistant Secretary |
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