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Peloton shares fall after it publicizes refinancing to stave off cash crunch

A pedestrian walks by a Peloton retailer in Palo Alto, California, on May perchance perchance well per chance also 8, 2024.

Justin Sullivan | Getty Photos

Peloton shares plunged on Monday after the related neatly being company talked about it’s miles launching a “world refinancing,” because it appears to stave off a cash crunch amid falling gross sales.

The corporate is offering $275 million in convertible senior notes due 2029 in a deepest offering and plans to enter into a $1 billion 5-year length of time loan and $100 million revolving credit facility.

Peloton plans to make spend of the proceeds to buy help about $800 million of its 0% convertible senior notes, that are for the time being due in 2026, and refinance its existing length of time loan.

Shares fell greater than 12% in extended procuring and selling after Peloton introduced the refinancing, however later regained some ground.

Closing month, Peloton introduced that its CEO Barry McCarthy used to be stepping down and talked about it deliberate to lay off 15% of its group attributable to it “simply had no different potential to bring its spending in line with its income.”

The restructuring used to be designed to enhance Peloton’s cash location as assign a question to for its related neatly being products continues to descend. The corporate has been working to invent definite free cash waft, which “makes Peloton a more handsome borrower” and “is required as the corporate turns its consideration to the valuable project of successfully refinancing its debt,” McCarthy talked about in a memo to workers before his departure.

In a letter to shareholders, the corporate talked about it’s miles “unsleeping” of the timing of its debt maturities, which comprise convertible notes and a length of time loan. It talked about it’s miles working intently with its lenders at JPMorgan and Goldman Sachs on a “refinancing strategy.”

“Overall, our refinancing targets are to deleverage and lengthen maturities at a cheap blended fee of capital,” the corporate talked about. “We’re impressed by the help and inbound passion from our existing lenders and traders and we review forward to sharing more about this topic.”

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