BALLY <BLY> SEEN SELLING OFF HEALTH UNIT
  Bally Manufacturing Corp's proposed
  public offering of 24 pct of its Health and Tennis Corp unit is
  seen as the first step towards the sale of the entire unit,
  analysts said.
      "In the longer-term horizon, Bally wants to concentrate on
  its gaming businesses," said analyst Dennis Forst of Seidler
  Amdec Securities Inc.
      Last week, Bally said it was considering the sale of
  another non-casino unit, its Six Flags amusement park unit,
  which analysts said could fetch about 300 mln dlrs.
      Bally spokesman Bill Peltier said "the company currently
  has no hard plans to the sell any more of the health club
  company, but in the long term we'll wait and see how the
  offering goes."
      Once Bally's biggest revenue producer, the health club unit
  had 1986 operating income of 60 mln dlrs on revenues of 456.2
  mln dlrs, 28 pct of Bally's revenues. Analysts estimate the
  unit could be sold for for 300-500 mln dlrs.
      Analysts said Bally's decision to offer shares in the unit
  could be the first step to selling it.
      "It would seem obvious that an offering would decrease the
  health club unit's debt, increase its cash flow and operating
  income, making it an attractive buy to a third party," Steven
  Eisenberg of Bear Stearns said.
      On Monday, Bally said it filed with the Securities and
  Exchange Commission for an initial offering of 24 pct, or 5.8
  mln shares, of the unit's common stock at 13-15 dlrs a share.
     About half the proceeds, 40 mln dlrs, will be used to reduce
  parent Bally Manufacturing's debt which has swelled to 1.6
  billion dlrs due to recent hotel acquisitions and the purchase
  of shares from Donald Trump who had threatened a hostile
  takeover, according to Bally treasurer Paul Johnson.
      Remaining proceeds from the stock offering and from a
  separate offering of 50 mln dlrs of 20-year convertible
  subordinated debt would be used to repay about 75 mln dlrs of
  short term senior bank debt of the health chain unit, a Bally
  spokesperson said.
      Analysts said Bally's health club unit's profits have
  remained strong, but are skeptical about the industry's long
  range prospects.
      "The fitness club industry, over the last 10 years, has
  grown tremendously, but the question is whether its a fad or a
  permanent part of our lifestyle," said Eisenberg of Bear
  Stearns.
      Analysts said fitness clubs will likely flourish if the
  public stays at its peak of health consciousness, but that
  overcapacity is likely to occur as consumer enthusiasm wanes.
       In addition, "the returns in the fitness club industry are
  just not as high as they are in the gaming industry," said one
  analyst.
       There are about 6,500 fitness clubs in the U.S., excluding
  clubs run by not-for-profit organizations, according to the
  Association of Physical Fitness Centers who estimates it to be
  an 8.0-billion-dlr-a-year industry.
       Asked if anyone has offered to buy the unit, which is the
  nation's largest health club chain, Peltier said, "no one has
  the money to offer to buy it."
      "The fitness industry is a fragmented industry with no
  leader and there is a great opportunity for growth through
  acquisition and then standardization," said Wayne LaChapelle,
  chief financial officer of Livingwell INc <WELL>, the nation's
  second largest fitness chain operator whih
      LaChapelle said Livingwell is always interested in
  acquisition opportunities but "could not afford an acquisition
  the size of Bally at this time."