Key Takeaways
- Peloton Interactive announced what it called a “global refinancing” plan to deal with its debt.
- The provider of exercise equipment and workout services will sell $275 million in notes, and enter into a $1 billion loan facility and $100 million revolving credit facility.
- Peloton said the money would be used to pay off and refinance current debt, and cover fees.
- Shares of the company were down more than 15% Tuesday afternoon.
Peloton Interactive (PTON) shares plunged Tuesday after the struggling fitness equipment maker and exercise program provider announced what it called a “global refinancing” plan to rework its debt.
The company, an investor darling during the COVID-19 lockdown, said Tuesday it would offer $275 million in convertible senior notes due in 2029, and enter into a $1 billion five-year term loan facility. In addition, it will add a $100 million five-year revolving credit facility.
Peloton noted that the money raised from the debt sale and new credit facilities, together with cash on hand, would be used to pay off about $800 million of its convertible debt due in 2026, refinance its existing term loan and revolving credit facilities, as well as pay fees.
Moves Follow Restructuring Announcement
The moves came about three weeks after the company announced “comprehensive restructuring efforts,” which included slashing its workforce by 15%, or some 400 employees, continuing to reduce its retail showroom footprint, and reimagining its “international go-to-market approach to be more targeted and efficient.”
At the same time, Peloton explained that CEO Barry McCarthy was stepping down, a little more than two years after taking over from co-founder John Foley and launching a massive shakeup of the firm as post-pandemic sales slumped.
Peloton became one of the hottest companies during the COVID-19 outbreak, when those stuck at home because of lockdowns bought up its equipment and services. However, once the restrictions ended, demand sank.
TradingView
Shares of the company were down 15.5% at $3.30 at around 2:15 p.m. Tuesday. The stock has lost more than half its value over the past 12 months and is down 98% since hitting their all-time high in January 2021.