Investing.com -- Xponential Fitness Inc (NYSE:XPOF) stock gained 2.4% in after-hours trading Monday following the announcement of a new $525 million credit agreement that refinances the company’s existing debt.
The boutique fitness franchisor said the new five-year term loan will be used to refinance its current credit facility in full, repurchase outstanding convertible preferred stock, and pay related fees and expenses. The agreement also includes a $25 million revolving credit facility for working capital and general corporate purposes.
According to Chief Financial Officer John Meloun, the refinancing could decrease interest payments by up to one percent if certain financial milestones are achieved. Importantly, the deal eliminates the company’s preferred stock, which was convertible into approximately 8.2 million shares of common stock.
"We are now even better positioned to support our strategic priorities and create long-term value for our shareholders moving forward," Meloun stated.
The positive market reaction suggests investors view the debt restructuring as beneficial for Xponential’s financial flexibility and capital structure. By eliminating the convertible preferred stock, the company reduces potential dilution that would have occurred if those shares had been converted to common stock.
Xponential Fitness operates as one of the leading global franchisors of boutique health and wellness brands.
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