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F45 founder sells home amid class action investigations after stock market plunge

A struggling Australian fitness franchise that has been savaged on the stock markets is now facing not one, but five potential lawsuits.

F45 Training Holdings Inc, known for its high intensity interval training (HIIT) classes, was at first an Australian success story after hitting the New York Stock Exchange in July last year and raking in $500 million on the first day.

But two weeks ago things drastically changed; the company’s founder and CEO Adam Gilchrist stepped down while 110 employees were laid off and expansion plans were slashed significantly.

Stock prices plunged off the back of the news and dipped to 62 per cent of its original price at its lowest, when it sank to $US1.35 ($A1.90) on July 27.

At time of writing, according to MarketWatch, F45 stock was trading at $US2.15 ($A3) compared to its listing price of $US16 ($A22.50) just a year earlier.

Now five heavyweight class action law firms from the US are calling for investors to come forward to explore the possibility of filing a class action.

The firms are investigating whether F45 misrepresented itself to investors and the most recent legal firm only announced it was investigating the company on Friday.

In July last year at its initial public offering, F45 sold 18.75 million shares of stock priced at $US16.00 per share.

It had a stunning $US1.46 billion ($A2 billion) market capitalization however that has since slipped to $US183.6 million ($A258.60).

In May, F45 thought it had secured a $US250 million ($A350 million) line of credit to keep rapidly expanding but by the next investor’s meeting in July, this had failed through.

But during the July trading update, investors learned that credit line would not be available.

After planning to roll out 1500 new franchises this year F45 will instead aim for between 350 and 450 and its forecasted revenue has dropped from $US275 million ($A387 million) to $US130 million ($A182 million).

F45 fitness founder and CEO Adam Gilchrist – not to be confused with the cricket player of the same name – reportedly immediately listed his house on the market after the downfall.

Coincidentally, the same weekend that another law firm announced it was investigating the possibility of a class action, Mr Gilchrist successfully sold his $A14 million Sydney home.

Mr Gilchrist and Rob Deutsch founded the company in 2013 in the Sydney suburb of Paddington but Mr Deutsch left in February 2020 and said he was devastated to hear what had happened since then.

“Never in my wildest dreams could I have imagined this,” Mr Deutsch wrote on Instagram after the shock news of the lay-offs. “When I exited, and sold out of F45, I left a healthy, phenomenal, beast of a business. All the way from the company culture to the heart beat of the business… The workouts. F45 was special.

“I genuinely hope all of the 110 laid-off staff, find happiness and opportunities elsewhere.”

News.com.au has contacted F45 for comment.

On Friday, US law firm Labaton Sucharow called for investors to get in touch, the latest in a string of legal firms circling F45 like sharks.

Prior to that, Schall Law Firm, a US shareholder rights litigation firm, announced last Tuesday that it was investigating F45 “for violations of the securities laws”.

Then there was Bragar Eagle & Squire, PC, another shareholder rights specialist, which started its own investigation a day later.

Bragar Eagel & Squire stated the company’s revenue was “down significantly” compared to what was previously promised to investors.

James Wilson of Faruqi & Faruqi also called for investors who have “suffered losses exceeding $US50,000 ($A70,450) investing in F45 Training stock or options”.

Portnoy Law Firm also weighed in, saying it was investigating “possible securities fraud” and that it would provide a “complimentary case evaluation and discuss investors’ options for pursuing claims to recover their losses”.

Embattled CEO sells home

Mr Gilchrist reportedly listed his Sydney mansion, located in Freshwater in the city’s northern beaches region, on the market following his company’s stock crash.

Over the weekend, it’s understood to be have been sold.

The Sydney Morning Herald reported that strict gag orders prevented the real estate agents from disclosing its final price.

However, they did confirm it sold for more than he bought it for in 2019, which was $14 million.

Realestate.com.au reported that it sold more than $1 million over the reserve.

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Categories
Business

F45 co-founder Adam Gilchrist selling Freshwater, Sydney manor after stock market collapse

The picturesque Sydney beachside manor owned by F45 co-founder Adam Gilchrist is set to go under the hammer after the Australian fitness giant’s stunning downfall.

Mr Gilchrist (not the cricketer), who stepped down as F45’s chief executive last week amid stock plunges and company-wide lay-offs, is selling his “beachfront trophy home” at Freshwater on Sydney’s northern beaches.

The home, 52 Ocean View Rd, grew into infamy in 2018 when Mr Gilchrist and his wife Eli bought the property for a whopping $14m due to a minor neighborly dispute.

The couple had purchased a three-bedroom cottage on 50 Ocean View Rd for $5.4m in 2017 and planned to spend $2.5m to develop the property.

But neighbors complained it would not comply with building height or boundary controls, which led to Mr Gilchrist taking the extraordinary step of withdrawing his proposal and setting the matter by buying his neighbour’s bigger home for the obscene amount.

The $14m price was a record for the Freshwater suburb, with agents considering 52 Ocean View Rd’s mammoth coming out an outlier price.

But the three-storey home is again on the market, with real estate agents billing it as “unquestionably one of the finest homes and locations in Sydney”.

“Cutting-edge architectural design and an unsurpassed beachfront setting combine in this state-of-the-art luxury residence to deliver the ultimate designer beach house,” a description of the home reads.

“Set to a picture-perfect backdrop that sweeps over the surf to the ocean’s horizon and North Head, the tri-level residence showcases living spaces and lift access to all three levels and has been appointed and furnished with every conceivable luxury.”

The home’s features include five bedrooms, three bathrooms and giant retractable windows in the dining room.

Mr Gilchrist suddenly announced last week that he was stepping down as F45’s chief executive after co-founding the business with Rob Deutsch back in 2013.

The company also revealed it would be laying off 110 staff and cuttings its operational expenses, which caused its stock price to fall by more than 60 per cent.

F45 hoped that by reducing its corporate workforce by 45 per cent it could return to a positive cash flow.

Mr Gilchrist said he would be “forever grateful” as he exited the company.

“To the staff that have worked tirelessly since our inception, you have been incredible in your efforts, and I thank you for all of your support,” Mr Gilchrist said in a statement.

“To the investors that have joined us along our journey, I thank you for your commitment to F45.

“Lastly, I am forever grateful to our franchisees who deliver the world’s best workout each day to F45 members around the world.”

Mr Deutsch, who stepped down as chief executive and sold his shares in the company in 2020, said there were “enormous issues needing fixing”.

“Never in my wildest dreams could I have imagined this,” he wrote on Instagram.

“When I exited, and sold out of F45, I left a healthy, phenomenal, beast of a business. All the way from the company culture to the heart beat of the business… the workouts. F45 was special.

“I genuinely hope all of the 110 laid-off staff, find happiness and opportunities elsewhere.”

F45 was a global fitness powerhouse before its stock shock last week, with more than 1500 studios in 45 countries and Hollywood superstar Mark Wahlberg among its investors.

Mr Gilchrist made $500m overnight when the company went public on the New York Stock Exchange in July last year.

His northern Sydney home will be up for auction on August 27.

Read related topics:sydney

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Categories
Sports

IPL franchises looking to contract players to 12-month deals, David Warner, Big Bash, The Hundred

Just weeks after Mike Atherton delivered the ICC an ominous warning of the very real threat of franchise cricket taking credence over the international game, an IPL boss has confirmed the desire to contract players across the world to 12-month deals.

“In an ideal world, sure – because that gives us the opportunity to make our vision and our strategy even stronger,” Kolkata Knight Riders CEO Venky Mysore told The Telegraph.

“If we were able to have X number of contracted players, and were able to use them all in different leagues, I think that would be nirvana. Hopefully, someday it will happen. I wouldn’t be surprised if it did.”

The report comes as former Australian captain Adam Gilchrist said it would be “commercial suicide” for Cricket Australia to allow David Warner to skip the Big Bash and play in a rival T20 league elsewhere in the world.

Australia's David Warner is considering his future in short-form cricket.  Photo: AFP
Australia’s David Warner is considering his future in short-form cricket. Photo: AFPSource: AFP

It also comes just weeks after the Proteas withdrew from their ODI series in Australia next January, with South Africa forfeiting their World Cup qualification points so they can have their international players at home for the launch of their new T20 competition.

While Gilchrist could understand Warner, who is in the twilight of his “great career”, wanting to play overseas to top up his bank balance, he said it would set a dangerous precedent for emerging players.

“This is the big kicker, isn’t it, of possibly being the step towards being contracted to the club before or over country for the predominant amount of cricket you play,” Gilchrist told SEN last week.

“I think it would almost be commercial suicide for them (CA) to allow a player like him (Warner) to go head-to-head up against their own competition.

“It’s the new younger player coming in that starts to make those noises where it’ll be really challenging.

“Perhaps it’s the first example where David Warner doesn’t sign a contract with Cricket Australia at all, he just plays for a match fee.

“He goes and plays wherever he wants but says, ‘I’m available for every Test match, for every one-day international and every T20 international’ by way of example, I’ll be there for you in national colours.

“But other than that, I’m going to play my club, my franchise cricket, wherever I want to, knowing that none of those big tournaments will be clashing with international cricket.”

Kolkata Knight Riders’ cricketer Andre Russell is one of a number of players who have become T20 specialists. Photo: AFPSource: AFP

Gilchrist’s comments came a fortnight after Atherton honed in on South Africa’s decision to walk away from their ODI series against Australia and, ultimately, predicted franchise cricket would increasingly fill players’ pockets and see them contracted by cashed-up owners instead of their countries.

“A franchise-dominated landscape, with yearly ICC tournaments and not much bilateral international cricket or Tests, is coming, though,” Atherton, the former England captain, wrote in The Times.

“All this is good news for the players’ bank accounts, mainly, but it will be a very different landscape, with players eventually contracted to private companies who will acquire franchises across the globe.

“I found myself chatting to a player’s agent this week in Birmingham along these lines. England, he said, will be the last man standing where Test cricket is concerned. June and July stand out as the only months without T20 competition when Test cricket can flourish.”

The Telegraph’s report confirms what many respected figures within the game have feared, with the privatization of the game, particularly at franchise level, now starting to take full effect.

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Twelve-month deals would likely have a seismic impact on the international game, enabling franchises to sign players on lucrative year-round deals and, as a result, throw into jeopardy a player’s international availability.

It could also have a destabilizing impact at a domestic level, with the next tier of players unable to improve and test their skills against international players, should they be overseas.

AceThe Telegraph highlighted, The Knight Riders now have four teams under their umbrella – their flagship IPL franchise, the Trinbago Knight Riders in the Caribbean Premier League, plus sides in the International League T20 (UAE) and Major League Cricket (US), which both launch next year.

Other IPL teams are buying teams in other leagues – all six franchises in South Africa’s new T20 league, which launches in January – as international cricket faces heightened pressure to compete.

One obstacle currently standing in the way of the IPL’s desire to globalize the game is the varied recruitment rules used across different T20 leagues.

Currently, for instance, India’s stars aren’t allowed to play in overseas T20 leagues while only four international players are allowed in an XI in the IPL.

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Mysore is hopeful those barriers will be broken down eventually and says England’s The Hundred and Australia’s Big Bash competitions are the next hunting grounds for IPL owners.

“If it happened that way, at some point in the future, that’d be great,” Mysore told The Telegraph.

“What we want to create is a common platform and a system and a culture that allows us to participate around the year – enhancing our brand, building our fan base, and providing opportunities to cricketers around the world. And in the process, you hopefully build a successful business around it.”

He added: “Our immediate reaction to any such proposal is to say, yeah, we are absolutely interested because this is part of our strategy. Whether it is the Big Bash or the Hundred, although we understand the challenges these leagues face in inviting private investments.

“Wherever we have gone, we’ve made it successful for the mutual benefit of the league as well as the Knight Riders. When a proposal comes to us it’s because they understand the value that the Knight Riders brand brings with it and the entire package that comes with it – we know how to build those brands.”

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