Peloton Interactive Inc (NASDAQ:PTON) shares are tumbling Tuesday after the company announced a global refinancing initiative.
What To Know: Late Monday, Peloton said it intends to offer $275 million worth of convertible senior notes due 2029 in a private offering to institutional investors. The company noted that it will grant the initial purchasers a 13-day option to purchase up to an additional $41.3 million aggregate principal amount of the notes.
Peloton also plans to enter into a $1 billion five-year term loan facility and a $100 million five-year revolving credit facility.
Peloton will use the net proceeds of the offering and the new credit facilities to repurchase approximately $800 million worth of its 0.00% convertible senior notes due 2026. The company said it will also use proceeds to refinance its existing term loan and revolving credit facilities and pay any related fees and expenses.
The refinancing comes after Peloton introduced a comprehensive restructuring effort in early May that included a global headcount reduction of approximately 15%, a continued reduction of the company's retail showroom footprint and a reimagination of its go-to-market approach.
The company said at the time that it expected the plan to reduce annual run-rate expenses by more than $200 million by the end of its 2025 fiscal year. As of May 2, Peloton had $794.5 million in unrestricted cash and cash equivalents.
Following the refinancing announcement, Baird analyst Jonathan Komp maintained Peloton with a Neutral rating and raised the price target from $3.50 to $4.
PTON Price Action: Peloton shares were down 14.4% at $3.34 at the time of writing Tuesday, according to Benzinga Pro.
Photo: courtesy of Peloton.