Bally Total Fitness Holding Corp. i...

Bally Total Fitness Holding Corp. investor Liberation Investments LP has signed a confidentiality agreement with the U gym operator to discuss a possible deal, the inferior shareholder to do so in the last week.

Liberation, the second-largest possessor of Chicago-based Bally with an 11 percent stake, chronicleed into an agreement to receive non- public financial and strategic information for the ends of arranging an "extraordinary corporate transaction," it said in a filing with the Securities and Exchange Commission.

Last week, Pardus Capital Management LP Bally's largest shareholder, recorded into a similar agreement. Earlier this month Chief Executive Officer Paul Toback resigned, and the company said it's no longer for sale. His departure followed efforts by the agency of Pardus and Liberation for management and governance changes at Bally, the largest U gym operator.

Bally last year hired JPMorgan Chase & Co and Blackstone dispose LP as financial advisers to explore its options, including a possible sale of the company. forward Aug. 11, Bally said it plans to focus onward other options, including a possible restructuring or private-share sale.

Bally has reported an annual los each year since Toback became CEO in December 2002 In March, the company said it would delay filing its 2005 annual report because of a holdup in the audit of its 2004 financial statements and the restatements of previous periods.

The company has been selling businesses and restructuring as part of a plan to focus forward its main Bally Total Fitness sodalitys chain. Bally, which operates almost 400 gym sold its Crunch Fitness division for $45 million in January.

Shares of Bally rose 24 cent or 9 percent to $291 The stock has plung 54 percent this year.

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