Peloton has announced another global refinancing, with plans to issue $600 million in secured bonds due in 2032 and arrange a new $200 million credit facility.
The company announced the proposed transactions on November 9. They plan to use the money raised from the bonds, along with cash they already have, to pay off their remaining term loan and cover fees and expenses.
The two parts of the proposal are:
- $600 million in senior secured notes due in 2032, with interest paid twice a year. The interest rate and other terms have not yet been set.
- A proposed $200 million revolving credit facility lasting five years. This provides borrowing capacity, rather than automatically adding $200 million to Peloton’s outstanding debt.
Peloton says their existing $1 billion term loan facility would be terminated when the remaining loans are repaid. The bond offering can close without the new revolving facility being established or the existing loan being repaid.
Any money left over could go toward purposes including share repurchases, capital spending, working capital or acquisitions.
Bloomberg describes the offering as a “junk bond” sale. Also called high-yield bonds, these carry lower credit ratings and a higher perceived risk of default than investment-grade bonds.
CFO Sid Thacker previously discussed a potential refinancing during Peloton’s November 5 earnings call. Thacker said the company’s goals were to complete their first ratings process, reduce debt, lower their cost of capital and give them more flexibility to deploy capital while maintaining a strong balance sheet.
Thacker said:
“Given the volatility in credit markets since late August, we are being methodical about our approach to any future refinancing. Our results this quarter, combined with strong free cash flow, further strengthen our operating and financial profile with the credit markets.”
As we covered in Peloton’s Q1 FY2027 earnings results, the company had already paid down $280 million of their term loan in October. Their quarterly filing puts the remaining loan balance at $697.5 million after the October 9 payment.
Peloton previously announced a global refinancing in May 2024 and completed it later that month. That deal included the $1 billion five-year term loan, $350 million in convertible notes due in 2029 and a $100 million revolving credit facility.
The new proposal would replace the remaining term loan, due in 2029, with bonds maturing in 2032. The release does not propose repaying the separate $350 million in convertible notes or specify whether the new revolver will replace the existing $100 million facility.
Lower borrowing costs remain one of Peloton’s stated goals. Whether this offering achieves that will depend on the final terms, which have not yet been announced.
You can read Peloton’s full refinancing announcement here.
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