A pedestrian walks past a Peloton store in Palo Alto, California, on May 8, 2024.
Justin Sullivan | fake images
Platoon Shares plunged on Monday after the connected fitness company said it is launching a “global refinancing” as it seeks to avoid a liquidity crisis amid falling 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 loan facility and a $100 million revolving credit facility.
Peloton plans to use the proceeds to repurchase about $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 and said it planned to lay off 15% of its workforce because it “simply had no other way to align its expenses with its revenue.”
The restructuring was designed 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,” he said. McCarthy in a memo to staff earlier. upon his departure.
In a letter to shareholders, the company said it is “aware” of the maturity schedule of its debt, which includes convertible notes and a term loan. He said he is working closely with his lenders JPMorgan and Goldman Sachs on a “refinancing strategy.”
“Overall, our refinancing objectives are to deleverage and extend maturities at a reasonable combined cost of capital,” the company said. “We are encouraged by the support and interest from our existing lenders and investors and look forward to sharing more on this topic.”
