**Carlyle Group Sells Troubled iRobot Loan Amid Bankruptcy Concerns**
Carlyle Group Inc. has divested a problematic loan extended to iRobot Corp., the renowned manufacturer of Roomba vacuum cleaners, as the company grapples with the looming threat of bankruptcy. The investment firm sold approximately $191 million in outstanding principal and interest to Santrum, a subsidiary of Shenzhen PICEA Robotics Co., according to a recent filing. The specifics regarding whether the debt was sold at a discount were not disclosed.
iRobot, which owes PICEA around $161 million—some of which is already overdue—has been in discussions with the manufacturer. In the filing, iRobot warned, “If we are unable to find sources of capital in the near term, or resolve our significant outstanding payables to PICEA, we may be forced to significantly curtail or cease operations and would likely seek bankruptcy protection.”
Carlyle initially provided a $200 million senior secured loan in 2023, banking on the potential of the consumer robotics market and the anticipated acquisition of iRobot by Amazon.com. However, the deal collapsed last year when European Union regulators indicated they would block the acquisition, leading Amazon to refrain from addressing the regulators’ concerns. Consequently, Carlyle received partial repayment of the loan, while iRobot obtained a $40 million termination payment that was primarily intended for loan repayment. iRobot and Carlyle later amended the loan agreement, allowing for a $4 million repayment, with the remainder being utilized for ongoing business operations.
In its latest financial report, iRobot disclosed a 33% year-over-year revenue decline in the U.S. and an operating loss of $17.7 million for the quarter ending September 27. CEO Gary Cohen attributed these challenges to “continuing market headwinds, ongoing production delays, and unforeseen shipping disruptions.” Earlier this year, the company revealed that its auditor expressed substantial doubt regarding its ability to continue as a going concern. Since then, iRobot has reached agreements with Carlyle to prevent breaching the going concern covenant on its loan, with the latest waiver set to expire on January 15. Should the waiver not be renewed, Santrum would have the right to exercise all applicable remedies under the loan’s credit agreement.
**FAQ**
**What are the implications of Carlyle’s loan sale to iRobot?**
The sale of Carlyle’s loan to iRobot indicates significant financial distress for the company, raising concerns about its ability to continue operations without securing additional capital or resolving outstanding debts.
