Beyond Meat’s shares have taken another significant hit as the loss-making alt-protein company launched a crucial debt swap and equity exchange.
Investors now have the opportunity to swap their existing zero percent convertible bonds, due in 2027, into new notes maturing in 2030. These new notes carry a 7% interest rate, alongside the exchange of approximately 326 million shares.
In an announcement made yesterday (29 September), the California-based Beyond Meat revealed that the program aims to eliminate over $800 million in debt. The exchange offer remains open until 28 October.
As of 28 June, Beyond Meat reported having $1.2 billion in debt, according to their second-quarter results statement published in August. Additionally, during this time, the company also appointed a chief transformation officer (CTO) on a temporary basis.
Throughout the first six months of fiscal 2025, volumes decreased across all sales channels, most notably in the US retail sector. As a result, Beyond Meat reported another bottom-line net loss—$82.2 million in the first half.
President and CEO Ethan Brown stated yesterday: “As we continue our business transformation, we have concurrently worked to strengthen our balance sheet and are pleased to announce that we are launching an exchange offer for our existing convertible notes.”
Moreover, he noted, “The exchange offer aims to significantly reduce leverage and extend maturity, two outcomes that will support our long-term vision of becoming the global leader in plant-based protein.”
However, Beyond Meat’s shares tumbled, falling 36% to $1.82 by the close of trading in New York yesterday. Notably, the company has failed to report a net profit since its public debut in 2019.
Following repeated losses, declining revenues, an exit from China, job cuts, and ongoing external financing, shares have plummeted over 52% this year. They now sit significantly lower than their initial public offering value.
Additionally, Beyond Meat indicated that its debt-exchange offer marks a pivotal step towards mitigating default risk. This initiative coincides with a simultaneous “consent solicitation” directed at holders of the 2027 notes.
This measure aims to “adopt certain proposed amendments to the indenture”, which, the company asserts, “would eliminate almost all restrictive covenants in the existing convertible notes’ indenture, as well as certain default events and related provisions applicable to these notes.”
As of yesterday, Beyond Meat reported that approximately 47% of existing note holders have supported the exchange offer and consent solicitation. However, 85% support is required to finalize the transaction.
John Boken, from consultancy AlixPartners, was appointed as Beyond Meat’s CTO in August. His responsibility involves “rapidly and aggressively reducing our operating expenses to align with projected near-term revenues; prioritizing increased distribution of our core product lines; and investing in margin expansion initiatives across these core products,” according to Beyond Meat.
Earlier this year, the company announced a secured $100 million financing package from Unprocessed Foods, a unit of the non-profit Ahimsa Foundation, which includes the option for a minority stake in Beyond Meat.
At the halfway mark in August, CEO Brown expressed, “The company continues to face an elevated level of uncertainty within its operating environment, which has, and management believes could continue to have, unforeseen impacts on the company’s actual realized results.”