A pedestrian walks past a Peloton store on May 8, 2024 in Palo Alto, California.
Justin Sullivan | Getty Images
Platoon Shares tumbled on Monday after the fitness affiliate company said it is launching a “global refinancing” as it looks to avoid a cash crunch amid slumping sales.
The company is offering $275 million of convertible senior notes due 2029 in a private offering and plans to enter into a $1 billion five-year term loan and a $100 million revolving credit facility.
Peloton plans to use the proceeds to repurchase approximately $800 million of its 0% convertible senior notes, which currently mature in 2026, and refinance its existing term loan.
Shares fell more than 12% in extended trading after Peloton announced the refinancing, but later regained some ground.
Last month, Peloton announced that its CEO Barry McCarthy would resign, saying it planned to lay off 15% of its workforce because it “simply had no other way to align its expenses with its revenues.”
The restructuring was intended to improve Peloton's cash position as demand for its connected fitness products continues to decline. The company has been working to achieve positive free cash flow, which “makes Peloton a more attractive borrower” and is “important as the company turns its attention to the necessary task of successfully refinancing its debt,” McCarthy said in a memo to the company. staff prior to the crisis. until his departure.
In a letter to shareholders, the company said it is “mindful” of the timing of the maturities of its debt, which includes convertible notes and a term loan. It said it is working closely with its lenders at JPMorgan and Goldman Sachs on a “refinancing strategy.”
“Overall, our refinancing objectives are to deleverage and extend maturities at a reasonable blended cost of capital,” the company said. “We are encouraged by the support and inbound interest from our existing lenders and investors and we look forward to sharing more on this topic.”
