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Peloton clinches $1bn loan as it seeks to shore up struggling finances

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Peloton clinches $1bn loan as it seeks to shore up struggling finances

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Peloton clinched a critical $1bn loan on Thursday, allowing the maker of home fitness equipment to shore up its finances, said people briefed on the matter.

The company was at one point was valued at nearly $50bn as consumers clamoured for its stationary bicycles during the depths of the pandemic. But it has faltered as consumers emerged from the pandemic, with Americans choosing to return to gyms and fitness studios in person, crimping demand for its products.

Earlier this month chief executive Barry McCarthy stepped down and the company announced it would cut 15 per cent of its workforce as its sales softened.

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The $1bn five-year loan will allow it to refinance debts that mature in the next few years, including repurchasing part of a convertible bond that matures in 2026.

The new financing has been considered integral to giving management time to execute a turnaround plan since Peloton had burnt through capital and faced the 2026 maturing convertible debt.

It had a unique challenge tied to the $1bn convertible bond that required it to refinance most of its debts over the coming year. The company’s existing $750mn term loans included a provision that required it to pay off the debt immediately if more than $200mn of the convertible bond was outstanding in November 2025, as opposed to in 2027 when the loan was otherwise set to mature.

The new loan Peloton secured on Thursday yielded roughly 12 per cent, which, while at the lower end of a range initially marketed to investors, nonetheless underscored the stress it faces. The interest rate on the loan was set 6 percentage points above the floating interest rate benchmark, which sits at about 5.3 per cent. A discount on the loan sweetened the yield to about 12 per cent for lenders. Unusually, the debt was not graded by the major US credit rating agencies.

By contrast, bonds from risky single B-rated borrowers are trading with a yield below 8 per cent, while triple C and lower-rated debt — among the lowest grades assigned by credit rating agencies — traded hands this week at about 13.9 per cent, according to data from ICE Data Services.

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The new loan, along with a $300mn convertible bond Peloton issued on Wednesday and a new $100mn revolving credit line, will remove near-term financing issues for the company.

The timing of the offering was particularly opportune for Peloton as investors have bid up the prices of risky corporate bonds and loans, clamouring for high-yielding debt. Banks led by JPMorgan Chase and Goldman Sachs were ultimately able to reduce the interest rate Peloton paid on the new loan given the demand.

Peloton did not immediately respond to a request for comment.

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Xi’s climate goals boost China’s nuclear industry

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Xi’s climate goals boost China’s nuclear industry

At Karachi’s Paradise Point, on the coastline of Pakistan, China’s long-term ambition for a world-leading nuclear energy industry is coming into view.

For nearly half a century, power at the site — Pakistan’s first nuclear operation — was delivered by Canadian-designed reactors. But, last year, Pakistani nuclear officials gave their final approval for new Hualong-1 reactors, which represent the first exports of China National Nuclear Corporation’s third-generation power station technology.

By March, Xu Pengfei, chair of the China Nuclear Power Engineering Corporation, was able to tell CGTN, China’s state broadcaster, that the units were “operating successfully”, and had demonstrated a “collaborative effort at innovation”, with domestic suppliers providing more than 90 per cent of the equipment.

Nuclear power remains a growth industry in China. Over the past decade, the capacity of installed plants has more than doubled, according to data from the US Energy Information Administration and the International Atomic Energy Agency. As of April this year, China had 55 reactors with installed capacity of 53 gigawatts, up from fewer than 20GW in 2014.

At present, the US is still the world’s biggest user of nuclear power, with 94 operational reactors with an installed capacity of 96GW. However, China is building new reactors at a faster pace than any other country. It has 26 reactors under construction, with an installed capacity of about 30GW.

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While Beijing’s original rationale for expanding nuclear power was energy security, the technology’s potential for reducing greenhouse gas emissions has become increasingly important to policymakers, according to researcher Philip Andrews-Speed in an analysis for the Oxford Institute for Energy Studies (OIES).

A key moment came in September 2020, when Chinese leader Xi Jinping announced that the country’s carbon emissions would peak before 2030 and hit net zero by 2060.

Policymakers in Beijing believe nuclear power can help replace coal-fired plants, which are still the main source of China’s electricity despite a rapid growth in renewables. And they are on track to deliver: China’s policy is in line with International Energy Agency estimates that global nuclear power capacity will have to double by 2050 to hit net zero goals.

In recent months, nuclear power technology has also been heralded in China as a “new productive force” — part of Xi’s vision of long-term economic growth underpinned by increasingly advanced manufacturing industries.

Michal Meidan, head of China energy research at OIES, says that nuclear energy is “definitely part of the solution” for China’s decarbonisation plans, especially given the country has its own nuclear industry that could generate revenues and growth internationally.

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But the rapid expansion of the nuclear industry in China has raised questions over resource security, safety, regulation, and export plans as geopolitical tensions rise. Meidan notes that Chinese attempts to export nuclear technology have “faced resistance”, mainly in Romania and the UK, amid a wider backlash against China in Europe and the US.

“Globally, nuclear is quite a divisive question,” Meidan says. “It clearly has environmental attributes that can help but safety, fuel reprocessing and uranium availability are concerns . . . It’s unclear how big a role nuclear will play in China’s energy transition.”

Last year, nuclear power accounted for about 5 per cent of total electricity generation in China but investment in construction of new plants reached $13.1bn — the highest in five years.

As more reactors swing into production, nuclear’s contribution to China’s electricity generation mix is expected to rise to about 10 per cent by 2035 and 18 per cent by 2060, according to the China Nuclear Energy Association.

$13.1bnInvestment in new nuclear power construction in China in 2023 — a five-year high

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David Fishman, an analyst at The Lantau Group, a consultancy, says the pace of growth of nuclear power in China over recent years means that the country is probably at “maximum capacity for the industry”, with regulatory agencies and the supply chain at particular risk of strain.

“To staff all the plants, you need to have nuclear . . . and chemical engineering graduates . . . and then the equivalent number of people in Beijing, at the regulatory end, who are able to manage all the plants, who are able to do safety inspections, and checks and reviews,” he says.

Fishman also notes that China is reluctant to become reliant on the “vagaries of the international markets” for its long-term uranium supply. China has a policy of sourcing roughly one-third of its uranium domestically, one-third from Chinese companies’ holdings in foreign mines, and one-third from the international spot market.

“But the fact still remains that they don’t have a lot of domestic uranium, so that could be a concern at some point,” Fishman says.

Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute, a think-tank, says a key domestic question is whether Beijing decides to expand its nuclear energy capacity from the eastern and southern coastline — where it is currently concentrated — into the country’s vast inland areas. Experts suggest that such plans could be included in the country’s 15th Five-Year Plan period, from 2026-2030.

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Li, who previously led Greenpeace’s China climate change team in Beijing, says that, while public perception of nuclear power in China is “neutral”, in the early 2010s a debate on whether to expand the industry inland drew furious responses from the provinces concerned.

“Nuclear is certainly not as controversial as in some of the continental European countries, such as Germany, or in Japan,” Li observes. “Having said that, inland power plants will be very controversial, simply because, if an accident happens, it will have a very large-scale impact for downstream provinces.”

Still, China’s advances in nuclear technology, thanks to lavish state support, mean that — like the country’s solar, wind and electric vehicle industries — its nuclear power sector is also looking outward, to reshape global energy markets.

Although there is resistance to Chinese nuclear projects in many western countries, the Chinese-made reactors at Karachi’s Paradise Point are just the start of an export push.

Over the next decade, China has plans to build and finance reactors across Asia, the Middle East, and Africa, according to Lami Kim, director of the Asian Studies Program at the US Army War College. She says this strategy could have “significant implications”, as Beijing shapes global nuclear governance and shifts the balance of power away from the US.

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Gateway Church elder says accepting resignation of pastor in sex abuse scandal was ‘difficult’ decision

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Gateway Church elder says accepting resignation of pastor in sex abuse scandal was ‘difficult’ decision

Four days after they learned of decades-old child sex abuse allegations against their senior pastor, Robert Morris, hundreds of Gateway Church employees filed into an auditorium in Southlake, Texas, on Tuesday to learn his fate.

Some staff members appeared solemn as they found their seats. Others looked angry. One attendee pulled out her cellphone and secretly hit record. Later, she shared the audio with NBC News and described the meeting in an interview. A second person who attended confirmed her account and the recording’s authenticity.

Kenneth W. Fambro II, a real estate executive who serves on Gateway’s board of elders, struggled through tears as he delivered the news that employees had come to hear: Morris, one of the nation’s most prominent evangelical leaders, was resigning from the church he’d founded 24 years earlier.

“This,” Fambro said of accepting Morris’ resignation, “has been one of the most difficult decisions in my life.”

The recording of Fambro’s remarks reveals the deeply conflicted feelings of church leaders as they come to terms with the knowledge that their founding pastor — the man who’d built Gateway into one the largest megachurches in America and served on former President Donald Trump’s spiritual advisory board — had confessed to engaging in “inappropriate sexual behavior” with a child.

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Fambro opened Tuesday by acknowledging that he and other church officials had long known that Morris had admitted to sexual misconduct when he was young. It was a story Morris told so often over the years from the pulpit and in one-on-one meetings that “you can get kind of numb” to it, Fambro said, according to the recording.

“Pastor Robert did a phenomenal job of being open and transparent about his transgressions and his past, his moral failures,” Fambro said, speaking on behalf of the elders board, which is charged with governing the church. 

“What we did not know was that she was 12 years old.”

Cindy Clemishire, the woman who accused Morris of molesting her as a child, disputed the notion that Morris had been transparent. In a statement to NBC News, she said she was disturbed that Gateway elders struggled over whether to remove him from leadership.

“What is so difficult about accepting the resignation from a man who repeatedly sexually abused a little girl for almost five years and then lied about it?” Clemishire said after having reviewed a transcript of the recording provided by NBC News. “Why wasn’t he terminated?”

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Clemishire and her lawyer, Boz Tchividjian, contend that she contacted Morris and church officials with her allegations in 2005 and 2007 and that Gateway’s board of elders should have long ago investigated Morris’ version of events. (Fambro began attending the church in 2006 and became an elder in 2014, according to Gateway’s website.)

Morris hasn’t been charged with a crime and didn’t respond to messages requesting comment.

The allegations were made public Friday in a post published by The Wartburg Watch, a website focused on exposing abuse in churches. Clemishire, 54, described in the post and in a subsequent interview with NBC News how Morris had molested her for years beginning on Christmas night in 1982, when she was 12.

Initially, Morris and Gateway’s elders responded Friday and Saturday by acknowledging in statements that Morris had several sexual encounters with a “young lady” when he was in his 20s and saying he had been transparent about his sin and had repented.

“Since the resolution of this 35-year-old matter, there have been no other moral failures,” the elders said in a message to employees Friday.

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But some Gateway parishioners and staff members viewed the statement itself as a moral failure. Why had church leaders described the alleged sex abuse of a 12-year-old with euphemisms?

Fambro didn’t address that question in his remarks Tuesday, and he and other church elders didn’t respond to messages requesting comment. A spokesperson for Gateway also didn’t respond.

The person who made the recording of Tuesday’s staff meeting said she shared it with a reporter because she believes the board of elders is “gaslighting” employees about its initial defense of Morris and needs to be replaced. NBC News isn’t naming the woman because she fears retaliation.

Pastor Robert Morris greets President Donald Trump as he arrives for a discussion at the Gateway Church Dallas campus in 2020.Jonathan Ernst / Reuters file

At the meeting, Fambro defended the board of elders, which he said had been fielding criticism from members who felt leaders had taken too long to respond to the crisis.

He said leaders had deliberated during multiple hourslong meetings Monday and Tuesday and were following the guidance they’d long gotten from their now-former senior pastor. 

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“If you’ve been here long enough, you’ve heard Pastor Robert say, ‘Before we can move, we need to hear God,’” Fambro said. 

Fambro also told employees he and the other elders “have great compassion” for Clemishire and don’t condone what happened to her.

“You won’t hear us try to explain it away,” Fambro said. 

But, he added, that doesn’t mean “we don’t love Pastor Robert, that we’re not defending him.”

He then spoke extensively about the profound impact Morris had on his life and on the lives of tens of thousands of church members. Fambro encouraged the audience not to let the revelations of child sex abuse make them lose sight of the good that God had done — and would continue to do — through Gateway and Morris.

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“So yes, there is an anointing on this house. Yes, there is an anointing on Pastor Robert,” Fambro said. “But both/and, yes? There was some stuff that was done. They both can exist.”

Fambro asked the staff to pray for Morris’ family, including his son James Morris, who is associate senior pastor and had been scheduled to succeed his father upon his planned retirement next year. 

Robert Morris is still pulling for Gateway, Fambro said, which was why he is stepping down.

“Pastor Robert wants to see Gateway Church succeed in the body of Christ,” Fambro said. “Pastor Robert wanted to resign to not be a distraction.”

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Revolut seeks valuation of more than $40bn in employee share sale

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Revolut seeks valuation of more than $40bn in employee share sale

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UK fintech Revolut is targeting a valuation exceeding $40bn in a share sale that would cement its status as Europe’s most valuable start-up, according to three people with knowledge of the plans.

The SoftBank-backed company is working with Morgan Stanley to sell about $500mn worth of existing shares, including those held by employees, the people said.

More than $40bn would be at least 20 per cent higher than the $33bn valuation Revolut achieved in a 2021 fundraising. It would surpass the market capitalisation of UK lender NatWest and Paris-based Société Générale, and be on par with that of Lloyds Banking Group.

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The ambitious target, if reached, would defy a difficult market for European fintech groups in the past two years. Stockholm-based Klarna, another prominent fintech, saw its valuation crash to $6.7bn from $46bn in a 2022 fundraising. Some venture capital investors have since marked down their stakes in Revolut.

The UK start-up is also facing continuing uncertainty over the fate of its application for a UK banking licence, which it first submitted more than three years ago. A banking licence is key for the fintech to boost lending and profit in its biggest market. However, regulators have stalled as Revolut was rocked by problems including a warning from auditors that they could not fully verify revenue figures in its 2021 accounts.

The company slipped to a loss in its latest delayed set of results for the year 2022 as a boom in cryptocurrency trading that previously boosted profits abated. Meanwhile rising costs offset the benefits from higher customer deposits and higher rates.

Revolut was founded by Nikolay Storonsky and Vlad Yatsenko in 2015 at about the same time as UK challenger banks such as Monzo and Starling. Since then it has far outpaced rivals in terms of customer growth and has pursued an aggressive international expansion.

Revolut has about 40mn customers globally, of which a third are based in the UK. Starling and Monzo, which are regulated as banks, have each less than 10mn customers and only operate in the UK.

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In 2021, it raised $800mn from investors including SoftBank’s Vision Fund 2 and Tiger Global Management.

The company said it expected revenues to climb to £1.7bn in 2023, from £923mn the previous year, with a “double digit net profit margin.”

Revolut is moving its headquarters to one of the most prominent buildings in London’s Canary Wharf financial district.

The fintech has also been backed by investors including TCV, Balderton Capital, Ribbit Capital and Molten Ventures.

Revolut and Morgan Stanley declined to comment.

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Additional reporting by Tim Bradshaw in London

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