Peloton Stock Plunges After Unveiling $1 Billion Loan to Refinance Debt

By Trisha Andrada

May 21, 2024 07:29 AM EDT

Peloton Interactive Inc. will reportedly undertake a "global refinancing" to resolve its debt and recover from a recent sales dip. However, this news caused its shares to tumble.

Daily Life In New York City Amid Coronavirus Outbreak
A closed PELOTON store as the coronavirus continues to spread across the United States on March 20, 2020 in New York City. (Photo : Cindy Ord/Getty Images)

Peloton Kicks Off $1 Billion Leveraged Loan Offering

An anonymous source told Bloomberg that the fitness company, known for its expensive treadmills and stationary bikes, unveiled a $1 billion leveraged loan offering on Monday.

The money will reportedly be used to pay down a term loan due in 2027 and buy back some convertible notes due in 2026. JPMorgan Chase & Co. will head the transaction, and a lender call will be set for Tuesday at 1 p.m. New York time.

Read Also: Private Equity Firms Eye Peloton Amid CEO Departure, Cost-Cutting Talks

Peloton Refinancing Plans Also Include Selling of $275 Million of Senior Convertible Notes

As announced on Monday, the company's refinancing plans include selling $275 million worth of senior convertible notes due 2029 and entering into a $100 million five-year revolving credit facility.

A second source told Bloomberg that the loan is being offered to a diverse group of investors, including private credit providers, direct lenders, and loan investors who can purchase debt that rating agencies do not rate. 

Bloomberg reported that the loan also has a unique penalty for early refinancing, comparable to a junk-bond contract. This individual also said that the convertible bond may be offered on Tuesday.

After Peloton announced the refinancing, CNBC reported that the stock dropped over 12% in extended trading but later recovered some of its losses.

Read More: Peloton CEO Barry McCarthy to Step Down While the Company Faces a Series of Layoffs Due to Low Profits

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