Robot vacuum pioneer iRobot admits it may soon cease to exist

IRobot, the company best known for its Roomba robot vacuum cleaners, has announced financial difficulties that have put its continued existence in doubt. In a published report, iRobot said its board of directors had begun considering options to exit the difficult situation, including refinancing its debt or possibly selling the company.

Image source: iRobot

The news sent the company’s shares plunging 42% to $3.63, its steepest intraday drop since the company went public in 2005. According to Bloomberg, the troubles began when Amazon abandoned its plans to buy the Roomba maker last year after European Union antitrust regulators threatened to block the deal.

The fallout for iRobot, which was already struggling, was immediate, with its stock plummeting in recent years. However, in 2023, iRobot secured a $200 million loan from the Carlyle Group, which provided the funding through its private lending arm. The funds were intended to help the company cope with a liquidity shortage while it waited for antitrust regulators to rule on the Amazon deal.

Under the terms of the loan agreement, iRobot agreed to pay Carlyle a rate of 9% above the SOFR benchmark, well above the standard terms for direct loans. However, after the Amazon deal fell through, the debt remained in place, adding to the company’s financial burden.

Currently, iRobot is forced to pay a fee for amending the terms of the loan agreement. According to published data, this fee will amount to $3.6 million, or about 2% of the total outstanding loan, and will be paid by taking on additional debt, which will only worsen the company’s balance sheet.

The company posted a net loss of $77.1 million for the fourth quarter ended Dec. 28. At the end of the year, iRobot had $134 million in cash and cash equivalents, up from the previous quarter but down from a year ago. That included $40 million in reserved funds that the company planned to use to purchase production materials.

IRobot is counting on new product launches to help rebuild its position, but warned that success is not guaranteed due to potential risk factors including demand, competition, macroeconomic conditions and tariff policies. The statement also stressed: “There is no assurance that new products will be successful.”