Here’s a list of notes from Peloton’s recent senior note offering.
- $1B Gross Total ($875M + full exercise of $125M). Net proceeds to be $976.8M.
- 0% Interest with notes fully maturing in 5 years (Feb 11th, 2026).
- Notes are convertible at a initial conversion price of $239.23/share (~55% increase from current stock price).
- Peloton used $81.3M to pay the capped call transaction.
- Peloton intends to use the remainder of the net proceeds from the offering for general corporate purposes, which may include working capital, capital expenditures, including for the construction or expansion of facilities, and investments in and acquisitions of other companies, products or technologies that Peloton may identify in the future.
- Not attached in the article, but Precor Acquisition was $420M and, in the earnings call, they pledged $100M to air freight and expedited ocean freight.
- They initially started by asking for $600M senior note offerings the beginning of the week (Feb 8th) before finally closing at $1B at the end of the week.
- Free Cash Flow was $128M last quarter ($198M op cash flow - $70M capex)
I am still quite the novice when it comes to analyzing securities, but I see this as a huge win for Peloton as they essentially paid $81.3M to get $976.8M over the next five years. It’s also a win for investors as it pushes dilution down the line when the stock should in theory be higher. I don’t see many negatives with this move other than it being debt. It will be interesting to see what they do with the additional capital they raised. The initial $600M offering makes sense for the shipping costs and the acquisition, but it will be interesting to see what the additional funds will be used for. The stock jumped 5.59% up to $154.67/share after the 0% interest news came out.
Does anyone have an additional thoughts/comments on this move by Peloton? Is there anything I’m overlooking in regards to this senior note offering?
Long PTON 3%