finance

KKR Admits Defeat on Its Pricey Pandemic Bike Bet

Source: Bloomberg Business

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Welcome to The Brink. I'm Constantine Courcoulas, a reporter in London, where I've been following KKR's decision to hand a struggling bicycle maker over to its lenders. We also have news on Blue Owl, the societal cost of AI and a star lawyer leaving Kirkland & Ellis.

Bad Brake

If there was a case study for the excesses of pandemic-era private equity, it might look a lot like KKR's investment in Accell Group.

A consortium led by the private equity giant acquired the Dutch bike manufacturer in 2022 for about €1.6 billion -- paying a more than 25% premium over the market price. Across Europe, consumers had flocked to bicycles and e-bikes as they avoided public transport and embraced outdoor exercise. The bet was that a boom in cycling would endure.

But the craze proved fleeting. This week, after investors had poured hundreds of millions more into the business, KKR said it would be handing the company over to its lenders, along with a parting cash injection -- worth around €30 million ($35.4 million), according to people familiar with the matter.

It marks the second restructuring of the company in little more than a year, and underscores how swiftly a deal can unravel under the weight of leverage, rising interest rates and a stubbornly cyclical industry.

Private equity's standard playbook depends on borrowing to amplify returns. In benign conditions, predictable cash flows service the debt while operational improvements drive equity gains. But when the cycle turns, leverage magnifies losses.

The problem for Accell was that when lockdown restrictions were lifted, demand for bikes cooled quickly. Manufacturers that had ramped up production were left with a glut of inventory and had to offer heavy discounts. The European Commission's extension of anti-dumping duties on Chinese e-bikes couldn't offset the pullback in consumer spending.

Add in rising borrowing costs -- a sharp reversal from the cheap-money era in which the deal was struck -- and Accell’s bloated balance sheet quickly became a challenge.

KKR and its co-investors had already tried to find a remedy. In early 2025, Accell completed a sweeping restructuringBloomberg Terminal that cut debt by roughly 40% to about €800 million and extended maturities to 2030. Lenders and shareholders injected €235 million of fresh cash.

The company also borrowed €100 million of super-senior debt last year, according to Fitch Ratings. That’s on top of the roughly €300 million in shareholder loans provided before the restructuring.

But all of that proved insufficient. Accell’s Chief Financial Officer Mohammed Hassan said in a statement this week that the prolonged downturn in the industry after the pandemic “undermined the impact” of last year’s overhaul.

As part of this week’s deal, lenders agreed to write off around €850 million of 1.5-lien, second-lien and holding-company level loans, people familiar with the matter said. Around €270 million of super-senior financing will remain in place, they added.

KKR is giving Accell cash to keep the business running throughout the ownership transition, according to a person familiar with the matter. It wanted to avoid the potential for a costly and drawn out bankruptcy process and unsettle the private equity firm’s relationship with lenders, the person added.

A spokesperson for KKR declined to comment. A representative for Accell did not respond to a request for comment.

To be sure, KKR wasn’t alone in buying a bicycle company at the top of the market. Billionaire and former Glencore Chief Executive Officer Ivan Glasenberg purchased Italian firm Pinarello in 2023.

Nor was it the only sponsor to face difficulties. In 2024, investment firm GBL wrote down the value of German bike company Canyon by 43%, citing “aggressive discounting” affecting the entire industry.

In Accell’s case, control will be passed to lenders, who have also been bruised. For RBC BlueBay, the bike maker was one of the two biggest laggards in its event-driven credit fund, according to a 2025 annual report. Accell continued to drag on performance “as its situation worsened throughout December,” a separate update to investors said.

High Alert

Bankrupt luxury retailer Saks Global Enterprises is moving to block Simon Property Group from closing two locations in California and New York, a clash that exposes a widening rift between one of the nation's largest mall owners and one of its most prominent anchor tenants.
Chemicals giant Ineos had its credit score cut by S&P Global Ratings, which said a sustained recovery for the business owned by UK billionaire Jim Ratcliffe won't come before 2028.
Bondholders granted Brightline, which runs a 235-mile private railroad between Miami and Orlando, a roughly two-month "grace period" on an interest payment due on its commuter bonds on Feb. 17.
A handful of software firms including McAfee have released their earnings ahead of schedule in a bid to convince lenders of their resilience to disruption from artificial intelligence.

Notes From The Brink

ION Group's founder Andrea Pignataro warned that artificial intelligence's cost to society will be many times larger than the $2 trillion that was wiped off the value of software firms in recent weeks, Giulia Morpurgo and Luca Casiraghi report.

A shrinking professional services industry, for example, could hit demand for everything from office space to business travel and the ecosystem surrounding venture capital, he wrote in a commentary titled The Wrong Apocalypse. His comments come after anxiety about the outlook for software providers roiled markets following the release of new tools from AI startup Anthropic.

Businesses like consulting firms are more vulnerable, he argued, because once they begin to use the tools to remain competitive "they feed the very system that is learning to make them unnecessary."

A former Salomon Brothers trader, Pignataro set up his data and software business in the late 1990s in London. Leveraged acquisitions of companies including equity-trading platform Fidessa and financial-analysis firm Dealogic helped transform ION into a key player in global markets. He remains owner of the group, which has been caught up in the software selloff, with bond and loan prices falling to near distressed territory.

The Latest on... Creditor Wars

Kirkland & Ellis partner David Nemecek, the star restructuring lawyer known for pioneering aggressive liability management deals for distressed companies, is joining Simpson Thacher & Bartlett after coming under scrutiny from some of his old firm's largest clients.

Dallas-based Nemecek will lead a newly created capital structure solutions practice at Simpson Thacher, which is also opening a second Texas office in Dallas alongside its existing Houston base.

Nemecek drew attention for his role advising Optimum Communications, formerly Altice USA. Optimum sued a group of creditors that had banded together to negotiate with the company, accusing them of colluding to shut it out of the US credit market. Although Nemecek was not directly involved in the lawsuit, he was widely viewed as a key architect behind the strategy.

"People who enter into cooperation agreements should be careful," Nemecek said as part of a panel discussion at the Bloomberg Global Credit Forum in June, referring to the pacts that bind participants to negotiate as one unit in discussions with companies. "There are serious legal considerations that they should be aware of, including the potential for antitrust claims."

Creditors including Apollo, BlackRock and Oaktree have asked a federal judge to dismiss the Optimum suit.

By The Numbers

Private credit jitters spilled into public markets after Blue Owl Capital moved to restrict quarterly withdrawals from one of its retail funds, sending its shares down as much as 10% on Thursday. The slide spread across alternative asset managers including Ares, Apollo, Blackstone, KKR and TPG, sharpening concerns about liquidity, valuations and the resilience of the $1.8 trillion private credit market.

At the center is Blue Owl Capital Corp II, where redemption requests exceeded the standard 5% quarterly cap. In a separate tech-focused vehicle, requests climbed to roughly 15% of net asset value, Silas Brown and Ellen Di Mauro report.

To raise cash, Blue Owl sold $1.4 billion of loans across three funds at 99.7% of par. Buyers included California Public Employees' Retirement System, Ontario Municipal Employees Retirement System, British Columbia Investment Management and Kuvare, the insurer Blue Owl acquired in 2024, Olivia Fishlow, Laura Benitez and Paula Sambo write.

OBDC II alone offloaded about $600 million of assets -- roughly 34% of its portfolio -- using proceeds to repay a Goldman Sachs credit facility and fund a special cash distribution equal to about 30% of NAV. The firm said it could return as much as half of investors' capital by year-end through repayments, earnings and potential further asset sales.

The near-par sales offered some reassurance on valuations, but the need to gate withdrawals highlights how sensitive retail-focused private credit vehicles can be to shifts in sentiment.

And Blue Owl is in for another test after Boaz Weinstein's Saba Capital Management and Cox Capital Partners launched a tender offer on Friday for shares of its non-traded BDCs, seeking a discount as high as 35%, James Crombie and Paula Seligson report.

The price that any tender clears at will provide a window into where the market gauges the value of these funds. Existing shareholders in the BDCs, including OBDC II, would have the option -- but no obligation -- to sell to the firms.