Shares of Peloton Interactive, Inc. tumbled by 16.3 percent following the announcement of the company’s plans for a comprehensive global refinancing effort. The fitness giant revealed it would issue $275.0 million in convertible senior notes due in 2029 as part of a private offering. Additionally, Peloton plans to secure a new financing structure, including a $1.0 billion five-year term loan facility and a $100.0 million five-year revolving credit facility.
Peloton also intends to provide initial purchasers with a 13-day option to acquire up to an additional $41.3 million in notes. The funds raised from this offering and the new credit facilities, combined with available cash, are earmarked for several strategic financial moves. These include repurchasing approximately $800.0 million of its 0.00 percent convertible senior notes due in 2026, refinancing existing term loan and revolving credit facilities, and covering related fees and expenses.
The completion of these financial transactions is interdependent, with the entry into the new credit agreements contingent upon the successful repurchase of a minimum of $800.0 million of the existing notes. The newly issued notes will serve as senior, unsecured obligations of Peloton and will accrue interest payable semi-annually. These notes will be convertible at Peloton’s discretion into cash, Class A common stock, or a combination thereof.
The offering targets qualified institutional buyers per Rule 144A under the Securities Act of 1933, with the issuance conducted through a private offering memorandum.
