Our client, Whitehorse Capital Management, LLC (“Whitehorse”), as a lender and administrative agent, closed a restructuring of an existing facility $130 MM credit facility for Lift Brands, Inc., as the borrower (“Lift” or the “Company”) and Snap Fitness Holdings, Inc. as the parent. The new debt facility consisted of existing debt rolled into new tranches under an Amended and Restated Credit Agreement, including a portion of debt converted into a first of its kind tranche type that can spring up or spring down depending on the EBITDA of the business when the existing sponsor exits the investment. This new tranche is governed by the performance of the company, where if it recovers and EBITDA exceeds a threshold, the Lenders have the opportunity to recover a portion of the converted debt and if performance declines, the Lenders will share in the loss by a reduction in the principal amount of the tranche.
In connection with the restructuring, the Lenders contributed the remaining debt to Lift in exchange for certain newly-issued shares of Class A Common Stock and penny warrants to purchase additional shares of Common Stock of the Company. The sponsor contributed additional cash consideration to the Company to retain a controlling stake in the Company.