Scott Watterson -- a hard-charging billionaire who based the maker of NordicTrack train bikes -- relinquished management of the every day administration of NordicTrack's father or mother firm, iFIT Well being & Health, sources near the state of affairs mentioned.
NordicTrack
The maker of NordicTrack train bikes and treadmills acquired a monetary lifeline this month — however solely after the struggling Peloton rival’s founder agreed to step down as chief govt, The Publish has discovered.
Buyers insisted that 66-year-old Scott Watterson — a hard-charging billionaire entrepreneur who based the corporate in 1977 after doing a stint as a Mormon missionary in Asia — relinquish management of the every day administration of NordicTrack’s father or mother firm, iFIT Well being & Health, sources near the state of affairs mentioned.
IFIT’s new backers likewise demanded management of the board, which meant booting longtime administrators from the Church of Latter-day Saints who had been near Watterson, sources instructed The Publish. Watterson stays chairman — however his wings have been clipped, the sources mentioned.
Michael Phelps invoice
A key beef was over iFIT’s bills, which ballooned over the previous yr as Watterson scrambled to outgun archrival Peloton by pouring tens of millions of dollars right into a advertising push that tapped Olympic swimming legend Michael Phelps.
Some traders griped that Watterson — who, they declare, ran the corporate like a household enterprise — racked up a large tab with a dangerous plan to pay it off with proceeds from an IPO that ended up getting scrapped in October. IFIT anticipated to lift $650 million within the public providing.
As soon as valued at greater than $10 billion, iFIT final yr was pressured to shed a whole lot of staff in a sequence of layoffs in a bid to gradual its money burn as pandemic-driven demand for train bikes from NordicTrack and Peloton alike dried up final fall.
Each firms had been slowed down in patent lawsuits in opposition to one another in addition to different health firms.
One supply near the corporate now pegs iFIT’s market worth nearer to $1.5 billion.
“It wanted a recent set of eyes and for somebody to handle the enterprise professionally,” one supply near the corporate instructed The Publish.
The traders – L Catterton and Pathlight Capital – needed assurances that new management can be put in earlier than they parked their tens of millions within the Logan, Utah-based firm, in keeping with the supply. They're now in discussions with candidates to succeed Watterson as CEO, the supply mentioned.
It’s a distinct story than the one iFIT instructed after it secured the $355 million funding in early March, asserting that Watterson can be stepping down as CEO “as beforehand deliberate.”
His 35-year-old son Mark, who's chief expertise officer, was promoted to co-president together with iFIT’s chief monetary officer, Steve Barr.
‘So many Wattersons’
The shuffle follows investor complaints that Watterson ran iFIT like a fiefdom –in keeping with one supply, Scott has been identified to “gown down his workers in entrance of the board of administrators” — and he doled out plum gigs to 11 relations, in keeping with public filings.
Certainly, Scott himself was poised to obtain $35 million upon completion of the IPO, which was in the end postponed resulting from “hostile market circumstances,” in keeping with securities filings. The flopped IPO didn’t cease iFIT from forgiving $53.2 million value of loans to member of the family workers proper earlier than the corporate’s IPO registration, filings present.
“iFit is a billion-dollar firm, however if you happen to take a look at the names of the executives there are such a lot of Wattersons within the C-suite,” one other supply with data of the funding phrases mentioned.
Watterson’s 62-year-old brother David, previously chief technique officer, is now not a director nor does he maintain an govt place. It’s Scott’s son Mark that Watterson hopes will take the reins of the corporate ultimately, the sources mentioned.
His three different sons — Blake, chief working officer; Eric, chief advertising officer; and Nick, a product supervisor; will proceed of their roles and are properly regarded by the traders, however are usually not but seen as CEO materials, sources mentioned.
Pathlight invested $325 million and L Catterton – backed by French luxurious big LVMH’s billionaire chairman Bernard Arnault – invested $25 million, in keeping with a supply near the corporate. Scott Watterson, who's value $1.6 billion in keeping with Forbes, invested $5 million, the supply mentioned. Pathlight didn't reply to requests for remark and L Catterton declined to remark.
IFIT didn't reply to repeated requests for remark.
‘Mormon brotherhood vanished’
As solely reported by The Publish, iFIT was going through down a possible chapter this yr resulting from a lawsuit from Pamplona Capital Administration, which had demanded quick compensation of a 2019, $200 million mortgage and $100 million in curiosity, alleging that iFIT lower a deal to amass a Chinese language producer that subordinated Pamplona’s mortgage to the corporate and violated the phrases of its settlement with iFIT.
IFIT this month mentioned it settled the dispute with out disclosing particulars. Sources mentioned the settlement was the important thing to unlocking the $355 million as Pathlight and L Catterton didn't need the legal responsibility hanging over the corporate.
L Catterton has successfully taken over the administration for now — and was probably the rationale that Scott agreed to the management modifications, citing friction between Watterson and Pamplona, in keeping with a supply.
The board, in the meantime, has been shrunk, with L Catterton holding three seats and the rights to put in three unbiased administrators. Gone are two high-ranking members of the Mormon church: Gary Stevenson, who’d co-founded iFIT and is now the twelfth Apostle of the church; and Bob Homosexual, an funding banker who additionally has held church management positions. IFIT administrators had been instructed to confer with Stevenson as “Elder Stevenson” at board conferences, the supply instructed The Publish.
“All that Mormon brotherhood vanished from the board,” the supply mentioned. “They had been a giant subject. All of them caught collectively and saved propping Scott up,” the supply mentioned.
Watterson and Stevenson served as Latter-day Saint missionaries in Asia earlier of their careers and shaped the health firm — then known as Weslo Inc. — collectively in 1977. Watterson speaks fluent Mandarin, in keeping with Forbes.
When iFIT introduced plans to go public final fall, the native press identified that Stevenson might grow to be a billionaire within the course of. The Salt Lake Tribune additionally identified that serving on a company board “would seem to violate long-standing church coverage.”
A church spokesperson responded that Stevenson had acquired a particular dispensation from church authorities, “ensuing from his legacy shareholdings and his position as a co-founder of the company.”
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