On March 8, Bloomberg reported that Citigroup Inc. is exploring options to refinance some of Peloton’s debt.
Bloomberg’s sources noted that these talks were informal, and no official deal may come out of it. A Peloton spokesperson told the outlet that “the bank was not representing the company”, and Citigroup did not give a comment to Bloomberg.
According to the report, discussion with private credit firms have included a proposal for a loan of at least $750 million to pay off a portion or all of Peloton’s convertible notes. In 2021, Peloton sold a $1 billion convertible bond in response to its post-pandemic slump.
Peloton also raised $750 million in 2022. However, there is a clause to this that any refinancing of this before May 2024 would trigger a penalty.
Bloomberg reported, “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.” However, with the company’s stock currently trading at less than $5 a share, “a conversion to equity is unlikely unless that price reaches around $239.”
Other proposals besides a $750 million loan are possible as well.
According to the company’s FY 2024 Q2 earnings results, Peloton estimated revenue for Q3 2024 to be between $700-$725 million, under industry estimates. 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.
You can read the full report from Bloomberg here.
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