BTU · Peabody Energy Corporation

Peabody Energy Corporation executed a refinancing transaction by issuing $250 million of 0.50% Convertible Senior Notes due 2031, replacing a portion of its higher-coupon 3.250% Convertible Senior Notes due 2028. The offering includes a private placement to qualified institutional buyers under Rule 144A, with net proceeds of approximately $243.3 million after discounts and expenses. The company used $16.7 million to enter into capped call transactions that reduce potential dilution from conversion of the new notes, with an initial cap price of $50.61 per share, representing a 75% premium over the reference stock price. The remaining proceeds, combined with available cash, will be used to repurchase approximately $241.2 million principal amount of the 2028 notes at a cost of $388.8 million, effectively retiring a significant portion of near-term debt and extending maturities. The notes are convertible at the holder's option under various conditions, including stock price thresholds (130% of conversion price), trading price triggers, corporate events, and during the final five months before maturity. The conversion rate is initially 26.0970 shares per $1,000, implying a conversion price of $38.32, a 32.5% premium over the May 28, 2026 VWAP of $28.92. This transaction reduces Peabody's interest expense and spreads out debt maturities, while the capped call protects existing shareholders from dilution up to the cap price. The overall impact is a balance sheet optimization that improves financial flexibility.