Peloton is making its debut in the junk-bond market with a $600 million debt offering as it looks to refinance its existing $1 billion term loan.
The company said on Monday that it plans to use proceeds from the offering, combined with existing cash on hand, to pay off an outstanding term loan from May 2024 that was worth $1 billion over five years. Under the proposed conditions, Peloton can also terminate the existing credit agreement originating from the loan.
Meanwhile, the notes will be secured obligations of Peloton, and accrue interest that will be payable semiannually, with the interest rate and other terms determined once the pricing of the offering is unveiled.
The bonds are set to mature in more than five years and, according to a source who spoke with Bloomberg, Goldman Sachs has facilitated meetings where Peloton sought interest from investors that would lock the bond at a yield at around 8 percent. A lender call is set for Monday, based on the same source who was familiar with the matter but was not authorized to speak publicly.
Peloton has also proposed a $200 million revolving credit facility that could provide additional access to capital for share repurchases, capital investments, acquisitions and other corporate purposes. The company said in its announcement on Monday that the notice was not an “offer to sell nor a solicitation of an offer to buy any of the notes,” and there has been no decision on whether a deal would proceed.
This is not the first time Peloton has looked to raise debt.
In 2021, the company used convertible senior notes to raise $1 billion, while an existing term loan from 2022 brought in $750 million in financing. The $1 billion term loan secured in 2024 also included $350 million in an upsized convertible note offering which matures in December 2029.
Last week, Peloton announced a stronger-than-expected start to its fiscal 2027 year, with first quarter revenue that beat analyst estimates and rising 2 percent at $559 million in revenue for its third straight quarter of growth. The brand pulled in $96 million in income compared to $14 million at the same point last year.
“We began the fiscal year by demonstrating that our financial engine is operating efficiently in the short-term while positioning us for the future. Our performance across the top and bottom lines is testament to our disciplined approach on cost along with continued strong Member engagement and strength in our commercial business,” Sid Thacker, Peloton’s chief financial officer said in the report last Thursday. “With solid fundamentals, healthy margins, and strong liquidity, we believe we have the balance sheet and flexibility to pursue our strategic ambitions and provide strong returns to our stakeholders in FY2027 and beyond.”
Before releasing its first quarter earnings, Peloton noted in July that it had around $1.3 billion of debt and $1.207 billion of cash, with a net debt of about $93 million.
