In a strategic financial maneuver, Peloton Interactive Inc . (NASDAQ: NASDAQ:PTON) has successfully priced a private offering of $300 million in convertible senior notes, with an additional $50 million exercised by initial purchasers, as part of its global refinancing efforts. The transaction was completed with the support of J.P. Morgan Securities LLC and Goldman Sachs & Co (NYSE:GS). LLC, who acted as the initial purchasers.
These 5.50% convertible senior notes, set to mature on December 1, 2029, were issued on Friday, with U.S. Bank Trust Company, National Association serving as the trustee. The offering targeted qualified institutional buyers, relying on Rule 144A under the Securities Act of 1933.
Peloton announced that the net proceeds, which amounted to approximately $343 million after deducting initial purchasers' discounts and commissions, were utilized to repurchase around $350 million of its 0.00% convertible senior notes due in 2026, including associated fees and expenses.
The notes will pay interest semi-annually at an annual rate of 5.50%, with the first payment due on December 1, 2024. Holders of the notes have the option to convert their investment into Class A common stock under specific conditions, such as stock price performance and corporate events, before September 1, 2029. The initial conversion rate has been set at 218.4360 shares per $1,000 principal amount, corresponding to an initial conversion price of approximately $4.58 per share, which is a 40% premium over the last reported sale price of Peloton’s stock on May 21, 2024.
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