Peloton to Launch Global Refinancing 3 Weeks After Beginning Restructuring
Peloton Interactive plans to launch a global refinancing.
The connected fitness company will offer $275 million aggregate principal amount of convertible senior notes due 2029 in a private offering and enter into a $1 billion five-year term loan facility and a $100 million five-year revolving credit facility, Peloton said in a Monday (May 20) press release.
“Peloton intends to use the net proceeds of the notes and the credit facilities, together with cash on hand, to repurchase approximately $800 million of its 0.00% convertible senior notes due 2026 … to refinance its existing term loan and revolving credit facilities and to pay fees and expenses related thereto,” the company said in the release.
This announcement comes about three weeks after Peloton announced the launch of restructuring efforts, including laying off approximately 400 employees — about 15% of its global workforce — and reducing its retail showroom footprint to mitigate costs.
“The objective of the cost reductions is to reshape Peloton to align our cost structure with the current size of our business and position Peloton to generate sustained and meaningful positive free cash flow, which is a top priority for us,” Liz Coddington, chief financial officer at Peloton, said when announcing these moves during the company’s May 2 earnings call.
On the same day, Peloton announced that Barry McCarthy stepped down as CEO, president and board director two years after joining the company and that the firm had begun a search for a new CEO.
Chairperson Karen Boone and Director Chris Bruzzo are serving as interim co-CEOs, while Director Jay Hoag became the new chairperson of the board of directors.
Boone said at the time that McCarthy joined Peloton “during an incredibly challenging time for the business” and had rearchitected the business’ cost structure to create stability and achieve positive free cash flow.
On May 7, it was reported that private equity firms have been considering a buyout of Peloton, with at least one firm talking with the company about going private and a number of other firms considering an acquisition.
The company still has a profitable subscription business, but it has struggled with the cost of manufacturing its bikes and treadmills, the high-profile recalls that those products have experienced, and the reduction in big-ticket purchases by consumers of all income groups.
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