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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15-5/8% Senior Subordinated Notes
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$200,000,000 |
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
On, or as soon as practicable following the Effective Date of the Applicants First Amended 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
TABLE OF CONTENTS
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 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-3 to this
Form T-3, the Company has accepted alternative restructuring proposals from (i) Anschutz Investment
Company, Goldman Sachs & Co. and funds advised by Tennenbaum Capital Partners, LLC (the Sponsoring
Subordinated Noteholders) and (ii) Harbinger Capital Partners Master Fund I, Ltd. and Harbinger
Capital Partners Special Situations Fund L.P. (Harbinger). Subject to the terms and conditions
of the Plan, when the Plan becomes effective on the date on which all conditions to consummation of
the Plan have been satisfied or waived (the Effective Date), either (i) the restructuring
proposal funded by the Sponsoring Subordinated Noteholders (the Noteholder Proposal) or (ii) the
restructuring proposal funded by Harbinger will be consummated (the Harbinger Proposal). If the
Harbinger Proposal is consummated pursuant to the Plan, the Company will issue up to $200,000,000
of 15-5/8% Senior Subordinated Notes (the New Senior Subordinated Notes) under an indenture to be
qualified hereby (the New Senior 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 Senior Subordinated Notes in addition to a cash
payment of $123.5 million.
The Company solicited pre-petition acceptances of the Plan and commenced a bankruptcy case on
July 31, 2007. As originally filed with the bankruptcy court, the Plan contemplated only the
Noteholder Proposal. Prior to the commencement of its bankruptcy case, the Company filed
applications to qualify four indentures governing four series of debt securities to be issued
pursuant to the Noteholder Proposal, if the Noteholder Proposal is consummated and that will not be
issued if the Harbinger Proposal is consummated. The Company filed an amended Plan, which
contemplates the alternative Harbinger Proposal, with the bankruptcy court on August 13, 2007 and
August 17, 2007. If the Harbinger Proposal is consummated under the Plan, and the New Senior
Subordinated Notes to be issued under the New Senior Subordinated Notes Indenture to be qualified
hereby are exchanged for Prepetition Senior Notes pursuant to the Plan, the issuance of the New
Senior Subordinated Notes would be exempt from registration under the Securities Act of 1933, as
amended (the Securities Act), pursuant to the exemption provided by Sections 1145(a)(1) of Title
11 of the United States Bankruptcy Code. To the extent that the solicitation of acceptances of the
Plan constituted an offer of new securities not exempt from registration under Section 1145(a)(1),
the Company relied 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 Senior Subordinated Notes under the solicitation of
acceptances for the Plan and the exchange of New Senior Subordinated Notes for Prepetition Senior
Subordinated Notes under the Plan will satisfy the requirements of either Section 3(a)(9) or
Section 4(2) 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 Senior 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 other 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, (3) payments of
the fees and expenses of the Companys legal and financial advisors and (4) a backstop commitment
fee in consideration for the entry by the Sponsoring Subordinated Noteholders into a Subscription
and Backstop Purchase Agreement, pursuant to which the Sponsoring Subordinated Noteholders agreed
to purchase senior subordinated notes to be issued in a rights offering if the Noteholder Proposal
is consummated under the Plan, in respect of which the Company believes that the offer and sale of
such subordinated notes will satisfy the requirements of Section 4(2) of the Securities Act and, to
the extent applicable, Regulation D promulgated thereunder. Neither the voting agent nor the
Companys financial advisors solicited acceptances in connection with the Companys solicitation of
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approval for the Plan or made 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.
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 |
Julie Adams
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Senior Vice President, Membership Services |
Marc D. Bassewitz
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Senior Vice President, Secretary and General Counsel |
William G. Fanelli
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Senior Vice President, Finance and Corporate Development |
Michael A. Feder
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Chief Operating Officer |
Gail J. Holmberg
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Senior Vice President, Chief Information Officer |
Thomas S. Massimino
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Senior Vice President, Operations |
Harold Morgan
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Senior Vice President, Chief Administrative Officer |
John H. Wildman
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Senior Vice President, Sales and Interim Chief Marketing Officer |
Theresa R. Willows
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Senior Vice President, Customer Care and Member Services |
Charles J. Burdick
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Director |
Barry R. Elson
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Director |
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
August 17, 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. |
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Common Stock |
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6,105,500 shares |
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14.8 |
% |
1001 Avenue of the Americas, Suite 1100 |
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Par Value $.01 |
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New York, New York 10018 |
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Emanuel R. Pearlman |
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Common Stock |
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4,619,450 shares |
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11.2 |
% |
Liberation Investment Group LLC |
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Par Value $.01 |
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Liberation Investments, Ltd.
Liberation Investments, L.P.
330 Madison Avenue, 6th Floor
New York, NY 10017
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(b) Voting Securities as of the Effective Date. The Company expects that, on the Effective
Date, Harbinger will own in excess of 10% of the Companys Voting Securities if the Harbinger
Proposal is consummated.
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 Senior Subordinated Notes Indenture.
CAPITAL SECURITIES
Item 7. Capitalization
(a) Capitalization as of the Date of Application. The following table sets forth information,
as of August 17, 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 if the Harbinger Proposal is consummated, 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 |
Preferred Stock, par value $.10 per share |
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200,000 shares |
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No shares |
13% Senior Second Lien Notes |
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$247,337,500 |
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$247,337,500 |
15-5/8% New Senior Subordinated Notes |
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$200,000,000 |
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$200,000,000 |
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INDENTURE SECURITIES
Item 8. Analysis of Indenture Provisions
The New Senior Subordinated Notes will be subject to the New Senior 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 Senior 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 Senior 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 Senior Subordinated Notes Indenture: (i) failure to pay any interest on any of the New Senior
Subordinated Notes when due, continued for 30 days; (ii) failure to pay the principal of, or
premium, if any, on the New Senior 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
Senior 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 Senior 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 Senior 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 Senior Subordinated Notes will
become immediately due and payable without further action or notice. Any such declaration with
respect to the New Senior Subordinated Notes may be annulled by the Holders of a majority in
aggregate principal amount of the outstanding New Senior Subordinated Notes upon the conditions
provided in the New Senior Subordinated Notes Indenture.
(b) Execution, Authentication, Delivery and Dating; Application of Money Collected.
The New Senior 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 Senior Subordinated Notes may be manual or
facsimile. Each Guarantor shall execute a Guarantee in the manner set forth in the New Senior
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 authentication and delivery of such New
Senior Subordinated Notes or did not hold such offices at the date of such New Senior Subordinated
Notes
On the Issue Date, the Company may deliver New Senior Subordinated Notes in the outstanding
aggregate principal amount of $200,000,000 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 Senior Subordinated Notes Indenture and not otherwise.
Because the New Senior Subordinated Notes are being issued to holders of the Prepetition
Senior Subordinated Notes, there will be no proceeds from the issuance of the New Senior
Subordinated Notes.
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(c) Satisfaction and Discharge.
The New Senior Subordinated Notes Indenture will be discharged and cease to be of further
effect as to all of the New Senior Subordinated Notes issued, when (i) either (a) the Company
delivers to the Trustee all outstanding New Senior Subordinated Notes for cancellation or (b) all
such New Senior 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
Senior Subordinated Notes 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 Senior 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 Senior Subordinated Notes.
Contents of application for qualification. This application for qualification comprises:
(a) Pages
numbered 1 to 7, 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 |
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 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 T3E-3
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First Amended Joint Prepackaged Chapter 11 Plan of Reorganization of Bally Total Fitness Holding
Corporation and its Affiliate Debtors dated August 13, 2007 (incorporated by reference to Exhibit
99.2 to the Companys Current Report on Form 8-K, file no. 001-13997, dated August 22, 2007). |
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Exhibit T3E-4
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Motion of Debtors for Order, Pursuant to Section 1127(A) of the Bankruptcy Code and
Bankruptcy Rule 3019, Authorizing the Debtors to Modify Their Joint Prepackaged Chapter 11 Plan of
Reorganization, dated August 13, 2007 (incorporated by reference to Exhibit 99.2 to the Companys
Current Report on Form 8-K, file no. 001-13997, dated August 14, 2007). |
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Exhibit T3E-5*
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Notice of Emergency Hearing, dated August 13, 2007. |
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Exhibit T3E-6*
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Notice of Filing Modified Plan and Plan Exhibits, dated August 13, 2007. |
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Exhibit T3E-7*
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Notice of Filing Press Release, dated August 16, 2007. |
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Exhibit T3E-8*
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Notice of Filing Further Modified Plan and Plan Exhibits,
dated August 17, 2007. |
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Exhibit T3E-9*
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Memorandum, from Kurtzman
Carson Consultants to holders of record of the Companys notes,
dated August 21, 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 HSBC Bank USA, National Association as Trustee
under the New Senior 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 22nd day of August, 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 M. Boege
Name: Kathleen M. Boege
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Its: Assistant Secretary |
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