NEW
YORK, May 21, 2024 /PRNewswire/ -- Peloton
Interactive, Inc. ("Peloton") (Nasdaq: PTON) today announced
the pricing of $300.0 million
aggregate principal amount of Convertible Senior Notes due 2029
(the "notes") in a private offering (the "offering") to persons
reasonably believed to be qualified institutional buyers pursuant
to Rule 144A promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), an upsize from the previously
announced offering size of $275.0
million. Peloton also granted the initial purchasers of the
notes a 13-day option to purchase up to an additional $50.0 million aggregate principal amount of the
notes. The sale of the notes to the initial purchasers is expected
to settle on May 24, 2024, subject to
customary closing conditions, and is expected to result in
approximately $300.0 million in gross
proceeds to Peloton before deducting the initial purchasers'
discounts and commissions and estimated offering expenses payable
by Peloton (assuming no exercise of the initial purchasers' option
to purchase additional notes). The offering is part of a previously
announced global refinancing, which also includes the proposed
entry into a $1.0 billion five-year
term loan facility (the "new term loan facility") and a
$100.0 million five-year revolving
credit facility (together with the new term loan facility, the "new
credit facilities").
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.
The notes will be senior, unsecured obligations of Peloton. The
notes will bear interest at an annual rate of 5.50%. Interest will
be payable semi-annually in arrears on June
1 and December 1 of each year,
beginning on December 1, 2024. The
notes will mature on December 1,
2029, unless earlier redeemed, repurchased, or converted.
Peloton may not redeem the notes prior to June 7, 2027. Peloton may redeem for cash all or
any portion of the notes, at its option, on or after June 7, 2027 and on or before the 20th scheduled
trading day immediately before the maturity date, if the last
reported sale price of Peloton's Class A common stock exceeds 130%
of the conversion price then in effect on (1) at least 20 trading
days (whether or not consecutive) during the 30 consecutive trading
days ending on and including the trading day immediately before the
date on which Peloton provides notice of redemption and (2) the
trading day immediately before the date Peloton sends such notice,
at a redemption price equal to 100% of the principal amount of the
notes to be redeemed, plus any accrued and unpaid interest, if any,
to, but excluding, the redemption date. No sinking fund is provided
for the notes. Holders of the notes will have the right to require
Peloton to repurchase for cash all or a portion of their notes upon
the occurrence of a fundamental change (as defined in the indenture
governing the notes) at a purchase price of 100% of their principal
amount plus any accrued and unpaid interest.
The notes will be convertible at an initial conversion rate of
218.4360 shares of Peloton's Class A common stock, per $1,000 principal amount of notes (equivalent to
an initial conversion price of approximately $4.58 per share of Class A common stock, which
represents a conversion premium of approximately 40% to the last
reported sale price of $3.27 per
share of Peloton's Class A common stock on The Nasdaq Global Select
Market on May 21, 2024).
Prior to the close of business on the business day immediately
preceding September 1, 2029, the
notes will be convertible at the option of the noteholders only
upon the satisfaction of specified conditions and during certain
periods. On or after September 1,
2029 until the close of business on the second scheduled
trading day preceding the maturity date, the notes will be
convertible at the option of the noteholders at any time regardless
of these conditions. Conversions of the notes will be settled in
cash, shares of Peloton's Class A common stock, or a combination
thereof, at Peloton's election.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of the notes or any shares of Class A common
stock potentially issuable upon conversion of the notes and shall
not constitute an offer, solicitation, or sale in any jurisdiction
in which such offer, solicitation, or sale is unlawful.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. We intend such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained
in Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements contained in this press release other than statements of
historical fact, including, without limitation, statements
regarding our expectations regarding the proposed offering, the new
credit facilities and the repurchases of the Existing Notes, are
forward-looking statements. The words "believe," "may," "will,"
"estimate," "potential," "continue," "anticipate," "intend,"
"expect," "could," "would," "project," "plan," "target," and
similar expressions are intended to identify forward-looking
statements, though not all forward-looking statements use these
words or expressions.
We have based these forward-looking statements on our current
expectations and projections about future events and trends that we
believe may affect our financial condition, results of operations,
business strategy, short-term and long-term business operations and
objectives, and financial needs. These forward-looking statements
are subject to a number of risks, uncertainties, and assumptions
and other important factors that could cause actual results to
differ materially from those stated, including, without limitation:
our ability to achieve and maintain future profitability; our
ability to attract and maintain Subscribers; our ability to
accurately forecast consumer demand for our products and services
and adequately maintain our inventory; our ability to execute and
achieve the expected benefits of our restructuring initiatives and
other cost-saving measures and whether our efforts will result in
further actions or additional asset impairment charges that
adversely affect our business; our ability to effectively manage
our growth and costs; our ability to anticipate consumer
preferences and successfully develop and offer new products and
services in a timely manner, or effectively manage the introduction
of new or enhanced products and services; demand for our products
and services and growth of the Connected Fitness Products market;
our ability to maintain the value and reputation of the Peloton
brand; our reliance on a limited number of suppliers, contract
manufacturers, and logistics partners for our Connected Fitness
Products; our lack of control over suppliers, contract
manufacturers and logistics partners for our Connected Fitness
Products; our ability to predict our long-term performance and
declines in our revenue growth as our business matures; the effects
of increased competition in our markets and our ability to compete
effectively; any declines in sales of our Bike and Bike+; our
dependence on third-party licenses for use of music in our content;
actual or perceived defects in, or safety of, our products,
including any impact of product recalls or legal or regulatory
claims, proceedings or investigations involving our products;
increases in component costs, long lead times, supply shortages or
other supply chain disruptions; accidents, safety incidents or
workforce disruptions; seasonality or other fluctuations in our
quarterly results; our ability to generate class content; risks
related to acquisitions or dispositions, including the acquisition
of Precor; risks related to expansion into international
markets; disruptions or failures of information technology systems,
or websites; risks related to payment processing, cybersecurity, or
data privacy; risks related to the Peloton App and its ability to
work with a range of mobile and streaming technologies, systems,
networks, and standards; our ability to effectively price and
market our Connected Fitness Products and subscriptions and our
limited operating history with which to predict the profitability
of our subscription model; any inaccuracies in, or failure to
achieve, operational and business metrics or forecasts of market
growth; our ability to maintain effective internal control over
financial and management systems and remediate material weaknesses;
impacts from warranty claims or product returns; our ability to
maintain, protect, and enhance our intellectual property; our
ability to stay in compliance with laws and regulations that
currently apply or become applicable to our business both
in the United States and internationally; our reliance on
third parties for computing, storage, processing and similar
services and delivery and installation of our products; our ability
to attract and retain highly skilled personnel and maintain our
culture; risks related to our common stock and indebtedness; our
anticipated use of the net proceeds from the offering; and those
risks and uncertainties described in the sections titled
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Part I, Item 2 of our Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
2024 and the sections titled "Risk Factors" in Part I, Item 1A
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Part II, Item 7 in our Annual Report
on Form 10-K for the fiscal year ended June 30, 2023, as such
factors may be updated in our filings with the Securities and
Exchange Commission (the "SEC").
You should not rely upon forward-looking statements as
predictions of future events. The events and circumstances
reflected in the forward-looking statements may not be achieved or
occur. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, performance, or achievements. Our forward-looking
statements speak only as of the date of this press release, and we
undertake no obligation to update any of these forward-looking
statements for any reason after the date of this press release or
to conform these statements to actual results or revised
expectations, except as required by law.
Investor Relations Contact:
James Marsh
investor@onepeloton.com
Press Contact:
Letena Lindsay
press@onepeloton.com
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SOURCE Peloton