Peloton unveils convertible-debt refinancing, and its stock falls 3%

Peloton unveils convertible-debt refinancing, and its stock falls 3%

Peloton lost its CEO earlier this year and has struggled

Ailing Peloton Interactive Inc. said late Monday it will issue convertible bonds as part of a debt swap, sending the fitness company’s stock 3.3% lower in the after-hours session.

Peloton PTON, -0.26% called it “a global refinancing,” saying it will offer $275 million worth of convertible senior notes due in 2029 in a private offering. The company will also enter into a $1 billion five-year term loan facility and a $100 million five-year revolving-credit facility.

The first people to buy the convertible debt will have a 13-day option to purchase up to an additional $41.3 million in the notes, the company said.

Peloton intends to use net proceeds of the offering, the new credit facilities and cash on hand to buy back about $800 million of convertible senior notes due in 2026, refinance its existing term loan and revolving credit facilities, and to pay related fees and expenses.

The notes will be convertible into cash, Peloton’s shares or a combination at the company’s discretion, it said. Interest rates, conversion rates and other terms of the notes are to be determined at pricing, the company said.

Peloton earlier this month announced that Chief Executive Barry McCarthy was stepping down, with board chair Karen Boone and director Chris Bruzzo serving as interim co-CEOs while the search for a permanent replacement is underway.

At the time, the company also spoke of its new restructuring program, which it said was meant to save more than $200 million a year. The plan also includes layoffs.

Also last month, Peloton was said to be within the sights of private-equity firms for a possible buyout.

Shares of Peloton have fallen 39% so far this year, contrasting with gains of around 11% for the S&P 500 index SPX.

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