JWCA advises peloton interactive on its record-setting debut zero-coupon convertible issuance

February 2021 | read press release

Transaction Background

Peloton successfully raised $1 billion (inclusive of greenshoe) in the convertible market at historically attractive terms (0.00% coupon and 65% conversion premium)

Peloton took advantage of strong underlying market conditions and the recent strength in its stock price to successfully execute its first convertible bond and capped call

Peloton engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of its transaction

JWCA provided extensive analysis for Peloton on deal structuring and related items, such as:

• Convertible structuring

• Derivative overlay structuring

• Accounting and tax analysis/implications

• Convertible and capped call documentation advice to ensure maximum value and future efficiency/flexibility for the company

• Syndicate structure and precedent data

JWCA designed and ran a capped call auction process to achieve competitive terms

JWCA provided advice, support and analysis throughout the negotiation and execution process

Results

Peloton’s convertible issuance was very well-received by investors

• The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s debut offering, which resulted in a ~45% upsize from a $600mm original base deal size

• The 65% conversion premium was 5% higher than the high end of the originally marketed conversion premium range of 55 – 60% 

• With this pricing outcome, Peloton achieved the best 5-year convertible pricing in history

Capped call documentation and auction process produced meaningful savings for Peloton, while maximizing flexibility for the Company