How can the fortunes of Esporta, one of the UK’s premier health and racquets club chains, change so dramatically since Halabi acquired the business in February 2007 from Duke Street Capital? As I write, Esporta could be heading for administration.
Neil Gillis, the former Chief Executive and Michael Ball, Finance Director resigned in May 2007. Why the sudden resignations? Was it poor chemistry with Halabi; a feeling of a job finished, or a sense of turbulent times ahead? Gillis engineers a remarkable turnaround of the business were the headlines following the sale to Halabi. Since then Esporta has seen a deterioration in trade with the company now revising full year EDITDA from £36 to £30 million. Consequently, this may have triggered a breach in banking covenants with Societe Generale who loaned £330 million to finance the deal. I understand that member cancellations are rising along with a slow-down in sales. Brian McCarthy Operations Director, resigned this week which exacerbates the present instability. So, how does a seemingly well-run business experience such deterioration in the space of a few months? Was Gillis so fundamental to the company’s success? What has been the attitude of the 50 club managers since Halibi’s arrival and Gillis’sdeparture? Please let me know your thoughts.