Conversion of real estate assets
Life Time Fitness announced today that its board of directors and senior management team have initiated a process to explore a potential conversion of real estate assets into a Real Estate Investment Trust (REIT).
Based on a review of several strategic alternatives, the Company’s board of directors believes that a REIT conversion could provide substantial benefits to the Company and its shareholders given its significant real estate holdings, while also supporting ongoing efforts to deliver innovative consumer and corporate health and wellness solutions as it executes its long-term growth plans.
In connection with Life Time’s evaluation of a REIT conversion, the Company’s board adopted a shareholder rights plan to prohibit ownership of more than 9.8% of its outstanding shares in order to safeguard its ability to pursue a pro rata dividend in connection with a REIT conversion. The shareholder rights plan also protects against coercive or abusive takeover tactics and helps ensure that Life Time’s shareholders are not deprived of the opportunity to realize the full and fair value of their investment. The rights will expire upon the earlier of August 21, 2015, or the first business day after the closing of the proposed REIT conversion.
The full text of the shareholder rights plan will be filed with the Securities and Exchange Commission.
There is no assurance that Life Time will change its current business plan or complete a REIT conversion. The Company does not expect to update the market with any further information on the process unless and until its board has approved a specific transaction or otherwise deems disclosure appropriate or necessary.
Wells Fargo Securities and Guggenheim Securities are serving as the Company’s financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP and Faegre Baker Daniels LLP are serving as its legal advisors.