A mysterious wealthy individual is currently leading the race to acquire the Derrimut 24:7 Gym chain, which is undergoing administration, potentially thwarting offers from nine other interested parties, including billionaire Adrian Portelli. Sources familiar with the sale process, who spoke on condition of anonymity, describe this enigmatic bidder as possessing financial resources surpassing those of Portelli.
The bidding war for the Derrimut 24:7 chain emerged following a recent creditors’ meeting, where it was revealed that the chain’s founder, Nick Solomos, had withdrawn $15 million from the financially troubled business. Administrators confirmed receiving ten offers for the gym group but refrained from disclosing bidder identities due to ongoing confidentiality agreements.
Financial Struggles and Administration
Derrimut 24:7 Gym, along with seven other associated companies, entered administration earlier this month after failing to meet financial obligations. The group operates 25 gyms across Victoria and South Australia, serving approximately 230,000 members. Despite the financial turmoil, the gyms remain operational as administrators seek a buyer to repay creditors.
The gym chain reportedly owes over $40 million, including approximately $12 million in tax debts, unpaid superannuation, and penalties. Known for its large facilities and affordable memberships, Derrimut 24:7 Gym has been a favorite among bodybuilding enthusiasts, offering annual memberships as low as $99, significantly below the market average of $700.
Controversy and Concerns
An investigation revealed the precarious state of Derrimut’s finances, struggling to cover basic operational expenses while funding luxury vehicles and allowances for Solomos and his family. Administrator Stephen Dixon of HM Advisory disclosed that the mystery bidder is already partially financing the administration to keep the gyms operational.
During the creditors’ meeting, concerns were raised about the mystery bidder’s identity, with some fearing a potential return of Solomos to the business. One creditor, speaking anonymously, expressed reluctance to engage with Derrimut if Solomos remained involved, while another noted Solomos’ continued use of a company-financed Lamborghini.
Despite the controversy, some creditors support Solomos, citing his entrepreneurial spirit and marketing acumen as vital to the brand’s success. They argue that his association with the brand, known for its connection to the supercar-driving businessman with working-class roots, adds significant value.
Future Prospects and Industry Interest
The administrator revealed that Solomos had extracted $15 million from the business through personal loans, which they intend to recover. However, much of Solomos’ property is under the control of receivers appointed by banks, complicating recovery efforts.
Before the company’s collapse, Portelli expressed interest in investing but withdrew due to management concerns. Portelli, whose wealth exceeds $1 billion from his LMCT+ promotion and raffle business, anticipated competition from major gym chains seeking expansion in Melbourne and South Australia. He pledged to preserve the Derrimut brand, synonymous with its origin in Melbourne’s western suburb.
While large corporate groups and private equity firms are reportedly eyeing the chain, there are apprehensions that the brand might not survive under new ownership. The administrator has not commented on the ongoing bidding process.
As the sale process unfolds, the identity of the mystery bidder remains a topic of speculation, with stakeholders eagerly awaiting the outcome that will determine the future of the Derrimut 24:7 Gym chain.
