The maker of NordicTrack train bikes has been slapped with a $300 million lawsuit that threatens to drive the corporate towards chapter, The Publish has realized.
iFIT Well being & Health – which scrapped plans to go public in October after archrival Peloton revealed pandemic-driven demand for train bikes was tanking — has been sued by a key lender over a deal the corporate has quietly lower to amass a producing accomplice, based on an explosive lawsuit.
The swimsuit by Pamplona Capital Administration — a hedge fund that lent iFIT $200 million in 2019 — claims that the take care of the unnamed producer in China violates its mortgage settlement because it contains handing out an fairness stake in NordicTrack’s maker, based on court docket papers and sources aware of the scenario.
Martin Schwab, a Pamplona government who sits on iFIT’s board, objected to the deal after studying about it at a Dec. 8 board assembly however was rebuffed, based on the swimsuit filed Jan. 18 in New York state court docket and sources near the scenario. Schwab declined to remark.
Insiders say the swimsuit — which is demanding $100 million in curiosity along with the principal of its $200 million mortgage — comes as iFIT’s funds have already apparently been thrown into chaos. The IPO — cancelled on the final minute due to “antagonistic market situations” — was deliberate to lift $650 million. iFIT has since continued to burn money as demand for train bikes has dwindled, sources mentioned.
IFit lately tapped funding financial institution Lazard to assist organize new financing, sources added. Chapter attorneys on the firm’s longtime authorized adviser Weil Gotshal, together with legendary restructuring lawyer Ray Schrock, even have lately been employed, based on a supply near the corporate.
“They’re brief on money and it’s a matter of months earlier than it runs out,” the supply speculated.
IFIT declined to remark. Weil Gotshal and Lazard didn’t instantly reply to requests for remark.
Early final 12 months, iFit had tapped Olympic gold medalist Michael Phelps as model ambassador and launched an aggressive advertising and marketing marketing campaign. Its worker ranks swelled to 2,500, based on the IPO submitting.
However shortly earlier than Christmas, iFIT enacted shock layoffs for a whole lot of software program, advertising and marketing and residential supply workers, based on information experiences and social media postings. One iFIT worker griped on Reddit that workers weren’t even provided severance.
In its IPO prospectus final 12 months, iFIT mentioned that regardless of income greater than doubling to almost $1.8 billion within the fiscal 12 months ended Might 31, its losses ballooned to greater than $500 million, leaving lower than $600 million on its stability sheet.
Based in Utah in 1977 by billionaire Scott Watterson, iFIT lately has been locked in a number of lawsuits with Peloton over mental property, with every accusing the opposite of copycat ways. However most lately, they’ve each been clobbered by fast-shrinking demand for home-exercise gear. Final week, Peloton’s embattled CEO John Foley denied media reports of a manufacturing halt as a consequence of sagging demand.
“Each firms have a post-pandemic hangover and are not in a position to hit their previous development charges,” mentioned a supply near iFit.