Facing a liquidity shortage and the possibility of default, the U.S. training equipment manufacturer Wahoo Fitness has fully recapitalized its company and eliminated all debt under the leadership of company founder Chip Hawkins and “equal” investors, new and existing (Rhône Group, David Wichmann of Jory Capital & Human Powered Health, and RZC Investments). The confidential terms reportedly also provide significant liquidity for product innovation.
“The investment from both new and existing investors is a clear sign of confidence in the strength of Wahoo – specifically our team, brand, strategy, and powerful ecosystem of innovative products, software, and services,“ Wahoo’s CEO Mike Saturnia commented. “This could not have happened without months of hard work from and support from our channel partners. We want to thank our supply chain and retail and distribution partners for their trust and confidence as we navigated to a successful conclusion to this process.”
How did it come about? After Wahoo launched in 2010, initially selling ANT+-to-iPhone adapters, followed by Bluetooth sensors, then the first trainer and bike computers, and eventually a full line of indoor and outdoor training devices, the company’s business was doing well. But when the pandemic hit, business exploded with sales, as it did for most indoor training companies. However, Wahoo was not only overwhelmed by demand but also kept its prices stable, which caused the company to go into quite a bit of debt. In June 2021, Rhône Equity took a majority stake in the company. As with many other fitness companies, business slowed after the pandemic as retailers cut back on restocking orders due to high inventory levels and inflation significantly reduced consumer spending. Wahoo’s debt continued to pile up. Three months ago, the company was taken over by 15 different banks that had called in the debt. At that point, the Rhône Group refrained from putting money into the company because it would only benefit the banks. As a result, Wahoo stopped all marketing activities, as well as most sponsorship and other non-critical business functions, and curbed product development of various products to save money.
