Shares of Peloton (PTON) are down more than 10% after the maker of internet-connected treadmills and exercise bikes said it is undertaking a refinancing as it deals with a cash crunch.
Specifically, the company said that it plans to offer $275 million U.S. in convertible senior notes due in 2029 in a private offering and plans to enter a $1 billion U.S. five-year term loan and $100 million U.S. revolving credit facility.
Peloton plans to use the proceeds to buyback $800 million U.S. of its 0% convertible senior notes, which are currently due in 2026, and refinance its existing term loan.
In April of this year, Peloton announced that chief executive Barry McCarthy was stepping down and said that it planned to layoff 15% of its workforce amid declining sales.
The restructuring was designed to improve Peloton’s cash position as demand for its home-based fitness products continues to decline.
In a letter to shareholders, the company said that it is mindful of the timing of its debt maturities and that it is working with its lenders at JPMorgan Chase (JPM) and Goldman Sachs (GS) on a workable, long-term refinancing strategy.
The stock of Peloton has declined 47% over the last 12 months and now trades at $3.91 U.S. per share.
