Beyond Meat shares plunged to an all-time low on Monday after the fake meat maker issued plans to erase over $800m of debt, as well as most of the stock’s value.
Beyond Meat is currently $1.15bn in debt due to 0% convertible notes that will mature in 2027. Under a new exchange offer made public yesterday, the company is looking to swap these for 7% notes due in 2030, plus common shares.
This ‘payment-in-kind’ deal is designed to allow Beyond Meat to pay interest with additional debt rather than cash.
The arrangement will only take effect if 85% of the company’s debt holders agree to swap, with 47% signed up so far. Other creditors have until 28 October to accept.
“The exchange offer is intended to significantly reduce leverage and extend maturity, two outcomes that meaningfully support our long-term vision of being the global plant protein company,” said Beyond Meat CEO Ethan Brown in a statement.
The announcement drove the company’s share price down 36% on Monday to less than $2 a share, bringing its total fall to over 70% in the past year.
Last month, Beyond Meat posted a 20% fall in revenue and wider-than-expected losses, blaming weak consumer demand in the US. It said it was facing “an elevated level of uncertainty” and did not provide any full-year estimates.
It has now brought in an interim chief transformation officer from consultancy AlixPartners to “aggressively” reduce costs as the company strives to stay afloat.
After the results, analysts at TD Cowen said the board had recognised the “existential threat facing the business and are taking steps to preserve cash and stabilise sales”.
In February, Beyond Meat confirmed it was laying off 9% of its global workforce – 64 employees – including all staff in China, where it has suspended operations.
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