Peloton stock (PTON) took a tumble Monday immediately following the launch of its “global refinancing”, as it seeks to sure up its dwindling cash position. This combines the sale of $275 million in convertible senior notes, a $100 million credit facility, in addition to a new $1 billion five-year term loan.
Under this initiative, Peloton plans to buy back and refinance $800 million of its loans currently due in 2026. PTON shares fell over 12% following the announcement, but has since partially bounced back.
Peloton released a press statement that reads:
Peloton intends to use the net proceeds of the offering of the notes and the new credit facilities, together with cash on hand, to repurchase approximately $800.0 million of its 0.00% convertible senior notes due 2026 (the “Existing Notes”), to refinance its existing term loan and revolving credit facilities and to pay fees and expenses related thereto.
The closing of the offering, the entry into the new credit facilities and the repurchase of the Existing Notes are not cross-conditioned upon each other, except the entry into the new credit facilities is conditioned upon the repurchase of at least $800.0 million aggregate principal amount of the Existing Notes.
In addition to this refinancing initiative, Peloton has recently made several other adjustments to achieve a better cash position. This includes Peloton adjusting and dialing back its marketing strategy, as well as letting go of an additional 15% of the company’s workforce.
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