Peloton Interactive, Inc. shares fell 16.3 percent today on news that the troubled fitness company intends to launch a global refinancing, pursuant to which it will offer $275.0 million aggregate principal amount of convertible senior notes due 2029 in a private offering and enter into a $1.0 billion five-year 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 said it also expects to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $41.3 million aggregate principal amount of the notes.

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 percent 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, and will bear interest payable semi-annually in arrears. The notes will be convertible into cash, shares of Peloton’s Class A common stock, or a combination thereof, at Peloton’s election. The interest rate, conversion rate and other terms of the notes are to be determined upon pricing of the offering.

The notes will only be offered and sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended by means of a private offering memorandum. Neither the notes nor the shares of Peloton’s Class A common stock potentially issuable upon conversion of the notes, if any, have been, or will be, registered under the Securities Act or the securities laws of any other jurisdiction, and, unless so registered, may not be offered or sold in the United States, except pursuant to an applicable exemption from such registration requirements.

Image courtesy Peloton Interactive