iRobot extends loan covenant waivers with lenders through October 24

iRobot Corporation (NASDAQ:IRBT) announced it has entered into a fifth amendment to its credit agreement with TCG Senior Funding L.L.C., an affiliate of The Carlyle Group, and other lenders. The amendment, signed on Friday, extends the waiver period for certain loan covenant requirements from September 19 to October 24. According to InvestingPro data, the company operates with a significant debt burden, with total debt of $226.88 million against a market capitalization of just $125.79 million.

According to a statement in the company’s SEC filing, the lenders have agreed to continue waiving iRobot’s obligations to provide an auditor’s report on its 2024 financial statements without a going concern qualification and to maintain a minimum level of core assets during the waiver period. The company’s auditor report for fiscal 2024 included an explanatory paragraph expressing substantial doubt about iRobot’s ability to continue as a going concern.

If iRobot does not regain compliance with these covenants after the waiver period ends and the lenders do not grant further waivers, an event of default would occur. The company stated that in such a scenario, lenders could accelerate repayment of outstanding loans and proceed against collateral, which includes substantially all of iRobot’s assets.

As of June 28, the fair value of iRobot’s term loan was $203.2 million, with cash and cash equivalents totaling $40.6 million. The company noted that if it were unable to repay its obligations under the credit agreement, it could be forced to significantly curtail or cease operations and may seek bankruptcy protection.

The credit agreement also contains restrictions on additional indebtedness, investments, dividends, mergers, and asset sales. The terms require that a portion of the termination payment received from Amazon.com, Inc. in early 2024 be used to prepay part of the loan.

iRobot’s board is continuing a review of strategic alternatives, including a potential sale or debt refinancing, which was first announced in March. The company stated that there is no assurance the process will result in any transaction.

This information is based on a press release statement included in iRobot Corporation’s recent SEC filing.

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