The largest health club group in the world - Fitness First - is close to being rescued by a private investment fund as it buckles under a £550 million debt burden.
The gym chain, which employs 13,000 people and has 1.2 million members worldwide, is set to fall under the control of Oaktree Capital, the Mail on Sunday said.
Oaktree, which has reportedly been buying up the chain's debt and now owns more than a third, is in talks with Fitness First's private equity backers BC Partners over a debt-for-equity deal.
Fitness First, which has 430 clubs worldwide, including 140 in the UK, recently warned that it was unlikely to make an £18 million interest payment due this month.
A debt-for-equity swap will see Oaktree take a majority share but will allow BC Partners to keep part of its stake, which might lessen its losses in Fitness First.
BC Partners paid £835 million for Fitness First in 2005, which it has already mostly written off after the company racked up millions of pounds of debts.
Fitness First, along with rival LA Fitness, has found revenues squeezed in recent months because consumers are spending less and budget gym operators are growing.
The chain was paying £144 million in interest on its borrowings each year on revenues of £636 million, it was reported.
BC Partners fired the company's top management team as part of an overhaul, including chief executive Colin Waggett, finance director Duncan Tatton-Brown and UK managing director John Gamble.
Rothschild and veteran restructuring consultant Donald Featherstone, European head of the turnaround practice AlixPartners, were hired as advisers on its negotiations with lenders. BC Partners was forced to pull a planned £1 billion Singapore listing in 2011 after 17 of the 20 previous flotations tanked below their flotation listing price.