Peloton (PTON) Updates Credit Agreements

Peloton (NASDAQ: PTON) disclosed:

On May 25, 2022, Peloton Interactive, Inc. (the “Company” or the “Borrower”) entered into an Amendment and Restatement Agreement to which the Second Amended and Restated Credit Agreement is attached (the “Second Amended and Restated Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and certain banks and financial institutions party thereto as lenders and issuing banks. Pursuant to the Second Amended and Restated Credit Agreement, the Borrower amended and restated its existing amended and restated credit agreement, dated as of June 20, 2019 (as amended by the first amendment dated as of February 8, 2021, the joinder dated as of March 18, 2021 and the second amendment dated as of December 10, 2021, together, the “Existing Credit Agreement”).
The Second Amended and Restated Credit Agreement provides for a $750.0 million term loan facility (the “term loan”), which will be due and payable on May 25, 2027 or, if greater than $200.0 million of the Company’s 0% convertible senior notes are outstanding on November 16, 2025 (the “Springing Maturity Condition”), November 16, 2025 (the “Springing Maturity Date”). The term loan amortizes in quarterly installments of 0.25%, payable at the end of each fiscal quarter and on the maturity date.

The Second Amended and Restated Credit Agreement also provides for a $500.0 million revolving credit facility (the “revolving facility”), $35.0 million of which will mature on June 20, 2024, with the rest ($465.0 million) maturing on December 10, 2026 or if the Springing Maturity Condition is met and the term loan is outstanding on such date, the Springing Maturity Date. The key terms of the revolving facility remain substantially unchanged from those set forth in the Existing Credit Agreement, including requiring compliance with a total level of liquidity of not less than $250.0 million and maintaining a minimum total four-quarter revenue level of $3.0 billion (which are replaced with a covenant to maintain a minimum debt to adjusted EBITDA ratio upon the Company’s meeting a specified adjusted EBITDA threshold).

The term loan bears interest at a rate equal to, at the Company’s option, either at the Alternate Base Rate (as defined in the Second Amended and Restated Credit Agreement) plus 5.50% per annum or the Adjusted Term SOFR Rate (as defined in the Second Amended and Restated Credit Agreement) plus 6.50% per annum. Each such margin will increase one time by 0.50% per annum if the Company chooses not to obtain a public rating for the term loan from S&P Global Ratings or Moody’s Investors Services, Inc. on or prior to November 25, 2022. A term loan borrowed in Alternate Base Rate is subject to a 1.00% floor and a term loan borrowed in Adjusted Term SOFR Rate term loan is subject to a 0.50% floor.
The Second Amended and Restated Credit Agreement contains customary affirmative covenants as well as customary covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, sell certain assets, guarantee obligations of third parties, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions. The Second Amended and Restated Credit Agreement also contains certain customary events of default. Certain baskets and covenant levels have been decreased and will apply equally to both the term loan and revolving facility for so long as the term loan is outstanding. After the repayment in full of the term loan, such baskets and levels will revert to those previously disclosed in connection with the Existing Credit Agreement.
The obligations under the Second Amended and Restated Credit Agreement with respect to the term loan and the revolving facility are secured by substantially all of the Borrower’s assets, with certain exceptions set forth in the Second Amended and Restated Credit Agreement, and are required to be guaranteed by certain material subsidiaries of the Borrower if, at the end of future financial quarters, certain conditions are not met.
The foregoing summary of the Second Amended and Restated Credit Agreement does not purport to be complete, and is subject to and qualified in its entirety by reference to the terms of the Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference].

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance sheet Arrangement of the Registrant.

The information set forth in Item 1.01 regarding the direct financial obligations under the Second Amended and Restated Credit Amendment is incorporated by reference into this Item 2.03.

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