(Bloomberg) -- Peloton Interactive Inc., the fitness company known for its pricey stationary bikes and treadmills, kicked off the sale of a $1 billion loan offering as it works to refinance existing debt and recover from a recent slump in sales, according to a person familiar with the matter.

Early pricing discussions call for the loan to carry interest at 600 basis points over the Secured Overnight Financing Rate and comes at a discount of 98 cents to 98.5 cents on the dollar, said the person, who asked not to be identified discussing private details. That pricing would work out to a yield of around 11.5%.

The proceeds will refinance a term loan due 2027 and repurchase some convertible notes due 2026. 

JPMorgan Chase & Co is leading the transaction and a lender call will be held Tuesday at 1 p.m. New York time. Commitments are due Wednesday, just one day after the lender call. 

Peloton is the latest issuer in a wave of companies that are taking advantage of the strong credit market. Citrix Systems Inc.’s parent company, Staples Inc. and Gray Television Inc. have also recently kicked off refinancing endeavors. 

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Peloton said Monday its refinancing plans also include selling $275 million of senior convertible notes due 2029 and entering into a new $100 million revolving credit facility. 

The loan is unrated and is being marketed to a broad range of investors, including direct lenders, private credit providers and loan investors that have the ability to buy debt not graded by rating firms, according to a different person with knowledge of the matter. The loan also includes a rare structure that would require the company to pay a penalty if the debt is refinanced early, similar to a junk-bond deal.

The convertible bond may be sold as soon as Tuesday, the person added. 

“We continue to work closely with our lead banks and our financial advisor on our refinancing strategy and are encouraged by the support and inbound interest we’ve received,” a Peloton spokesperson said in an emailed statement.

JPMorgan declined to comment.

Peloton was a high-flier during the early days of the pandemic, when lockdowns sent consumers searching for its stationary fitness equipment and fitness classes. But as people returned to gyms, paying subscribers declined, leaving the company with a surplus of inventory.

Earlier this month, Chief Executive Officer Barry McCarthy announced plans to step down amid a restructuring that will reduce the fitness company’s global workforce by 15%.

Peloton shares have lost about 97% of their value since the start of 2021. The stock fell as much as 5.4% in after-market trading to $3.70 on Monday after the company announced the refinancing plans. 

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