Bloomberg Línea — Goldman Sachs asked John Foley, co-founder and former CEO of US exercise-bike company Peloton, to provide additional collateral for his personal loans, and for which Foley had used Peloton shares as security.
According to The Wall Street Journal, the Peloton co-founder received several requests to pay back the money he borrowed against the New York-based manufacturer’s holding company before he left the company’s board last month, according to people familiar with the discussions.
Foley left Peloton’s board, which would give him the flexibility to sell or pledge more shares as Peloton’s stock fell, according to the WSJ. But he denied to the WSJ that this is the reason he left the company.
Since peaking at $160 per share in December 2020, Peloton shares have fallen by nearly 95%.
Last year, the former CEO had pledged shares valued at $300 million as collateral for personal loans.
Foley was able to obtain private financing and avoid selling stock, people quoted by the WSJ said. Foley declined to say Monday how much of his current stake was pledged, or how much he had borrowed against his holdings.
The Peloton co-founder’s seat on the company’s board limited his ability to raise additional funds because most public companies prohibit directors and executives from selling their shares during certain trading periods, according to the WSJ.
In addition, Peloton’s policy limits collateral for margin loans by directors or executives to 40% of the value of the shares or options purchased from an individual, according to the newspaper.
Foley’s decision to leave the board in September came on the heels of the company making layoffs, a move to staunch its Foley saw his personal fortune plummet as the value of his holdings fell. His share of the company, which was worth $1.5 billion, is now worth less than $100 million.
“Everyone can see I’ve had a tough year,” he told the WSJ. “This was not a fun resetting of the personal balance sheet.”