Why the Viva Leisure (ASX:VVA) share price is surging 16% today

Shares in Viva Leisure are soaring today. Could this be why?

| More on:
A man and woman high five each while sitting down after working out at the gym.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Viva Leisure Ltd (ASX: VVA) share price is surging despite no price-sensitive news having been released by the company today.

However, less than 2 hours before the ASX closed yesterday, Viva Leisure released an update to the market.

The update outlined the Commonwealth Bank of Australia's (ASX: CBA) decision to defer its formal review of Viva Leisure's financial performance.

Additionally, some of its New South Wales health clubs will soon be able to reopen.

While the update wasn't price sensitive, the market has seemingly reacted favourably nonetheless.

Right now, the Viva Leisure share price is $1.91, 16.46% higher than its previous close.

Let's take a closer look at Viva Leisure's recent update.

Viva's market update

The Viva Leisure share price is soaring today, potentially spurred by a market update released by the company yesterday afternoon.

Then, the company announced CBA has agreed to defer its formal review of financial covenants until March 2022. The bank agreed to the deferral at the request of Viva Leisure.

In its financial year 2021 results, Viva Leisure noted it had agreed to new credit terms for a debt facility with CBA worth approximately $35 million during the financial year just been.

The facility comprises a $25 million Market Rate Loan facility – which was drawn to $10 million at the time of Viva Leisure's earnings release – a bank guarantee facility, and a direct debit facility.

Additionally, Viva Leisure announced 20% of its NSW portfolio will be allowed to reopen from 11 September.

The news followed the NSW Government's decision to lift COVID-19 lockdowns in regional parts of the state.

The reopening will see the doors of 7 of Viva Leisure's businesses unlocked. However, they will still face certain restrictions.

Viva Leisure share price snapshot

Despite today's uptick, the Viva Leisure share price is still firmly in the ASX red.

Right now, its share price is 35% lower than it was at the start of 2021. It has also fallen 21% since this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Consumer Staples & Discretionary Shares

A farmer looks backwards towards his crops.
Consumer Staples & Discretionary Shares

Elders shares result: The good, the not so good and the interesting, according to Macquarie

It was a mixed half for the agribusiness company. Here's Macquarie's take.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
Consumer Staples & Discretionary Shares

Takeover terms found unfair to Star Entertainment shares investors but the 'only lifeline' left

Star has released the independent expert's report into the Bally's takeover deal and set a date for the vote.

Read more »

A warehouse worker is standing next to a shelf and using a digital tablet.
Consumer Staples & Discretionary Shares

Wesfarmers share price dips amid strategy day for investors

What's ahead for this diversified conglomerate?

Read more »

A man looks a little perplexed as he holds his hand to his head as if thinking about something as he stands in the aisle of a supermarket.
Consumer Staples & Discretionary Shares

Should I buy Woolworths shares today?

Woolworths shares have gained far less than Coles shares over the past year. Is that about to change?

Read more »

A woman sits at her home computer with baby on her lap, and the winning ticket in her hand.
Consumer Staples & Discretionary Shares

Which 'enduring high-quality business' has become a forgotten ASX 200 stock?

Fundie says this ASX 200 consumer discretionary stock has been flying under investors' radar.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Consumer Staples & Discretionary Shares

Could Wesfarmers shares hit $100 in 2025?

Wesfarmers shares have risen 113% over the last five years.

Read more »

Interest rates written on top of pictures of houses on a computer.
Share Market News

3 ASX 200 consumer discretionary stocks to benefit from a rate cut

With an RBA rate cut expected this afternoon, it could be positive news for these three stocks. 

Read more »