Peloton has announced that they have officially finalized their “holistic refinancing” efforts, giving them access to nearly $1.5 billion.
The company shared that this refinancing has allowed them to “reduced overall debt, extended debt maturities and achieved more flexible loan terms.”
Last week, we reported that Peloton was looking to raise around $1.4 billion in a “global refinancing” effort. This would consist of a $1 billion loan, $275 million from the sale of convertible notes, as well as a $100 million credit facility.
When the refinancing effort was announced, the company indicated they were looking to move quickly on it, as reports indicated that commitments to invest were expected to be due within a matter of days.
Now, Peloton has announced everything is completed.
The final amount raised looks very similar to what they set out to do. There is a $1 billion loan, as well as a $100 million credit facility. The company ended up selling $350 million worth of convertible senior notes, instead of the $275 million they expected.
So far, Peloton has already used some of that money to do some refinancing, specifically “to strategically repurchase approximately $800 million of 0% convertible senior notes due in 2026 at a discount, to refinance its existing term loan and revolving credit facilities and to pay fees and related expenses.”
Peloton’s Chief Financial Officer, Liz Coddington, noted that they “ahieved our refinancing goals of modestly deleveraging and extending our maturities at a reasonable blended cost of capital.”
She went on to state:
“This successful outcome underscores the resilience of our subscription business and signifies a tremendous vote of confidence in Peloton’s future. We are now operating from stronger financial footing and are well positioned to continue to provide the best fitness experience for our Members and deliver sustainable, profitable growth for our shareholders.”
In the last earnings call Peloton’s new CEOs had shared they were aware of concerns around Peloton’s debt – this global refinancing is their answer to that.
You can read the full press release here, or embedded below:
Peloton Interactive, Inc. (“Peloton”) (NASDAQ: PTON) today announced it has successfully completed a holistic refinancing that reduced overall debt, extended debt maturities and achieved more flexible loan terms.
Summary of Transactions
- The Company syndicated and closed a new $1 billion five-year term loan facility with a broad investor base (the “new TLB facility”)
- The Company raised $350 million from new and existing investors through an upsized private offering of convertible senior notes due in 2029 (the “notes”)
- The Company secured a new $100 million five-year revolving credit facility with JP Morgan and Goldman Sachs (together with the new TLB facility, the “new credit facilities”)
Peloton used net proceeds from the notes and new credit facilities, together with cash on hand, to strategically repurchase approximately $800 million of 0% convertible senior notes due in 2026 at a discount, to refinance its existing term loan and revolving credit facilities and to pay fees and related expenses.
“On behalf of the entire Peloton leadership team, we’re delighted with the incredible show of support that we received from new and existing investors who contributed to our oversubscribed and competitively priced refinancing. Notably, we achieved our refinancing goals of modestly deleveraging and extending our maturities at a reasonable blended cost of capital,” said Liz Coddington, Chief Financial Officer of Peloton. “This successful outcome underscores the resilience of our subscription business and signifies a tremendous vote of confidence in Peloton’s future. We are now operating from stronger financial footing and are well positioned to continue to provide the best fitness experience for our Members and deliver sustainable, profitable growth for our shareholders.”
The Company worked with its lead banks, JP Morgan and Goldman Sachs, and its financial advisor, BDT & MSD Partners, to complete this holistic refinancing.
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All they did was kick the can down the road. They need to start cutting costs.