| Item 1.01 | Entry into a Material Definitive Agreement |
On May 30, 2024, Peloton Interactive, Inc. (the “Company” or the “Borrower”) entered into an Amendment and Restatement Agreement, to which the Third Amended and Restated Credit Agreement is attached (the “Credit Agreement”), with each of the lenders and issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and JPMorgan Chase Bank, N.A. and Goldman Sachs Lending Partners LLC as Joint Bookrunners and Joint Lead Arrangers, providing for a $1.0 billion term loan facility (the “Term Loan”) and a $100.0 million revolving credit facility (the “Revolving Facility”), which will each mature on May 30, 2029. Such facilities may be increased, and new term loans incurred, in each case as set forth in the Credit Agreement. The Credit Agreement amends and restates the Company’s existing second amended and restated credit agreement, dated as of May 25, 2022.
The Term Loan will initially bear interest at a rate equal to, at the Company’s option, either the Alternate Base Rate (as defined in the Credit Agreement) plus 5.00% per annum or the Term SOFR Rate (as defined in the Credit Agreement) plus 6.00% per annum. Any borrowings after the delivery of the financial statements and related Compliance Certificate for the first full fiscal quarter of the Borrower completed after the Third Restatement Effective Date (as defined in the Credit Agreement), the additional applicable rate for Alternate Base Rate loans or Term SOFR Rate loans shall be based on the Company’s First Lien Net Leverage Ratio (as defined in the Credit Agreement), with a 0.50% step-down to the extent the First Lien Net Leverage Ratio is less than 5.00 to 1.00. A Term Loan borrowed in Alternate Base Rate is subject to a 1.00% floor and a Term Loan borrowed in Term SOFR Rate term loan is subject to a 0.00% floor. The Term Loan amortizes in quarterly installments of 0.25%, payable at the end of each fiscal quarter and on the maturity date.
The Revolving Facility, when drawn, bears interest at a rate equal to, at the Company’s option, either the Alternate Base Rate (as defined in the Credit Agreement) plus 4.00% per annum or the Term SOFR Rate (as defined in the Credit Agreement) plus 5.00% per annum and with respect to the Commitment Fee, 0.50% per annum, provided that the Commitment Fee is subject to one 0.125% step-down after the delivery of the financial statements and related Compliance Certificate for the first full fiscal quarter of the Borrower completed after the Third Restatement Effective Date for which the First Lien Net Leverage Ratio is less than 5.00 to 1.00. A Revolving Loan borrowed in Alternate Base Rate is subject to a 1.00% floor and a Revolving Loan borrowed in Term SOFR Rate term loan is subject to a 0.00% floor.
The Credit Agreement contains customary affirmative covenants as well as customary covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, incur liens or grant negative pledges, make loans and investments, conduct transactions with affiliates, sell certain assets, enter into certain swap agreements, guarantee obligations of third parties, declare dividends or make certain distributions and undergo a merger or consolidation or certain other transactions. The Credit Agreement also contains certain customary events of default.
The obligations under the 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 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 Credit Agreement also includes financial covenants that require the Borrower to maintain (i) when revolving loans are outstanding as of the last business day of any week, total liquidity of not less than $250.0 million as of such day, and (ii) when revolving loans are outstanding as of the last day of any fiscal quarter, a minimum trailing four quarter consolidated subscription revenue of $1.2 billion.
The foregoing summary of the Credit Agreement does not purport to be complete, and is subject to and qualified in its entirety by reference to the terms of the Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
