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Peloton Enters Into $1B Loan Facility as Part of Refinancing Effort

Peloton Enters Into $1B Loan Facility as Part of Refinancing Effort

The connected fitness company has had trouble adjusting to the post-pandemic environment, recently losing its CEO and laying off a chunk of its workforce

Peloton will enter into a $1 billion loan facility among other financial moves as the struggling connected fitness company embarks on what it calls a “global refinancing” plan.

On Monday, Peloton announced that it intends to enter into a series of financial transactions including a $1 billion, five-year term loan facility, the issuance of $275 million in convertible senior notes and a $100 million, five-year revolving credit facility. In total, Peloton will get around $1.4 billion in new credit from the transactions.

The convertible senior notes will be issued to private investors and will be due in 2029. Peloton plans to use the proceeds of the notes offering and the credit facility, along with existing cash on hand, to repurchase around $800 million of its 0% convertible senior notes due in 2026, it said.  

According to a report from Bloomberg, JPMorgan Chase is leading the loan transaction. 

The money moves come as Peloton looks to shake itself out of a prolonged post-pandemic slump; the company has had trouble adjusting as consumers return to in-person fitness activities in gyms and studios at the expense of working out at home on Peloton bikes and treadmills. 

Last month, the connected fitness company announced the departure of CEO Barry McCarthy and laid off 15% of its workforce amid slumping hardware sales and issues growing its subscriber base. Peloton also stated that it was looking to reduce its annual expenses by over $200 million as part of a cost-cutting plan. 

Connected Fitness Woes

Peloton isn’t the only connected fitness company to struggle in the post-pandemic environment. Clmbr, which attracted investment from celebrities including LeBron James and Jay-Z at the height of the pandemic for its connected vertical climbing machine, laid off a quarter of its staff and closed an in-person studio in Los Angeles last summer. In October, Interactive Strength, better known as Forme, announced plans to acquire Clmbr and grow the company’s B2B distribution network. 

Lululemon notably discontinued Mirror, a connected fitness smart mirror device it paid $500 million for at the height of the at-home fitness boom in 2021. The activewear giant instead partnered with Peloton in a deal that puts content from Peloton instructors on Lululemon Studio, an on-demand workout platform. 

Peloton’s Subscriber Predicament

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For its part, Peloton launched a large-scale rebrand in 2023, saying it wanted to be known as more than just a “bike company.” Since then, Peloton has looked to position itself as a fitness media platform rather than an equipment brand, touting its workout classes that range from indoor cycling to strength training to yoga. 

While Peloton’s instructors are highly popular among a devoted fan base of diehards, the connected fitness company has had trouble attracting a broader audience in a post-pandemic world filled with workout options. 

Earlier this year, Peloton reported around 3 million “connected fitness subscribers” (those who own a Peloton machine and a monthly subscription plan) but only around 700,000 digital-only subscribers; the latter figure has been decreasing in recent quarters.  

Private equity firms are rumored to be interested in buying Peloton and taking it private. The connected fitness company’s market value has dropped around 84% since it went public in 2019 and 97% from January 2021 at the height of the pandemic. 

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