According to a Bloomberg report, Citigroup Inc. is exploring various options for refinancing some of Peloton’s debt. Keep reading below the fold to learn more.
The report by Bloomberg came out March 8, and at that time, it was noted that the talks between Citigroup Inc. and Peloton about relieving debt were informal and that nothing may come from it at all. Citigroup didn’t give Bloomberg a comment, but a Peloton spokesperson did tell the publication that “the bank was not representing the company.”
Per Bloomberg‘s, a discussion with private credit firms included a proposed loan with a $750 million minimum in order to pay off some – or all – of Peloton’s convertible notes. Peloton sold a $1 billion convertible bond in 2021 as a response to its post-Covid 19 pandemic problems (via Pelo Buddy).
In 2022, Peloton was able to raise $750 million; that said, there is a clause to this raising of money that says the refinancing of the $750 million before May 2024 would trigger a penalty for the company.
Bloomberg notes:
If more than $200 million of the securities remain outstanding by November 2025, Peloton’s existing loan would become immediately due, according to a filing.
With Peloton’s stock is currently trading at less than $5 a share, “a conversion to equity is unlikely unless that prices reaches around $239.”
There are other proposals besides just the $750 million loan that are possible, too. Per Peloton’s 2024 Q4 earnings, the company estimated Q3 2024 revenue to be between $700 and $725 million, which is under industry estimates. Per Pelo Buddy:
Peloton CEO Barry McCarthy stated that they expected the company to be free cash flow positive in FY 2024 Q4 but to not be free cash flow positive for the overall year.
More on Peloton:
- NBA’s Josh Hart to join Peloton for ‘3rd Quarter Ride’
- Be your own producer with Peloton’s new audio mix feature
- Peloton welcomes Women’s History Month with specialty programs & content
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