On May 8, 2024, a pedestrian walked past a Peloton store in Palo Alto, California.
Justin Sullivan | Getty Images
Peloton Shares in the connected fitness company plunged on Monday after it said it was launching a “global refinancing” as it looks to avoid a cash crunch due to falling sales.
The company will issue $275 million of convertible senior notes due 2029 through a private placement and plans to enter into a $1 billion five-year term loan and a $100 million revolving credit line.
Peloton plans to use the proceeds to repurchase approximately $800 million of 0% convertible senior notes, currently due in 2026, and refinance its existing term loans.
After Peloton announced the refinancing, its stock price fell more than 12% in after-hours trading, but later recovered some of its losses.
Last month, Peloton announced the resignation of its chief executive, Barry McCarthy, and said it planned to cut 15% of its workforce because the company “simply has no other way to align its expenses with revenue.”
The restructuring is aimed at improving Peloton’s cash position as demand for its connected fitness products continues to decline. McCarthy said in a previous memo to employees that the company has been working toward positive free cash flow, which “makes Peloton a more attractive borrower” and “is important as the company turns its attention to success.” necessary task to refinance its debt”. to his departure.
In a letter to shareholders, the company said it was “monitoring” debt maturities, which include convertible notes and term loans. The company said it was working closely with its lenders at JPMorgan Chase and Goldman Sachs to develop a “refinancing strategy.”
“Overall, our refinancing goals are to deleverage and extend maturities at a reasonable blended cost of capital,” the company said. “We are encouraged by the support and interest from our existing lenders and investors, and we look forward to sharing information about this More information on the topic.”
About The Author
