Peabody Completes Exchange Transaction And Extends Substantial Portion Of Near-Term Debt Maturities

ST. LOUIS, MO – Peabody has completed its previously announced exchange transaction following the tender of 86.86 percent of its senior secured notes due 2022.  The closing of this transaction extends a substantial portion of Peabody’s debt maturities to December 2024, eliminates its net leverage ratio covenant and finalizes a four-year standstill with its surety bond providers.    

“Closing of this transaction is a significant milestone for the company and its many stakeholders,” said President and Chief Executive Officer Glenn Kellow.  “With the majority of our nearest term funded debt maturities now at the end of 2024, we believe these steps provide us with the additional flexibility needed to continue to pursue operational improvements as well as capture potential seaborne market improvements.”

In connection with the exchange, Peabody has agreed to commence by February 13, 2021 an offer to purchase up to $22.5 million in aggregate accreted value of the new Peabody 2024 notes at a purchase price equal to 80 percent of the accreted value of the new 2024 notes, plus accrued and unpaid interest, if any, to, but excluding the redemption date for the offer to purchase.

Peabody also exchanged $540 million of revolving credit facility commitments with its revolving lenders for $206.0 million of new structurally senior term loans under a credit agreement between the lenders and certain subsidiaries of Peabody that indirectly own the company’s Wilpinjong mine, a new $324.0 million senior secured letter of credit facility between the lenders and Peabody, $10.0 million of cash consideration and 100 basis points of exchange fees.  Following this exchange with Peabody’s revolving lenders, the first lien net leverage ratio covenant under the company’s existing credit agreement has been eliminated.

The global surety agreement was also finalized, which substantially reduces contingent liquidity risk by resolving outstanding collateral requests and limiting future collateral requirements of the sureties through the maturity date of the credit agreement.

In line with this agreement, Peabody posted $75 million of letters of credit in the fourth quarter of 2020 and will post an additional $25 million of collateral per year beginning in 2021 through 2024 for the benefit of the sureties, plus other amounts in accordance with the surety agreement.  Surety providers have agreed to a standstill agreement under which they have agreed not to demand any additional collateral for existing bonds; draw on letters of credit posted for the benefit of themselves; or cancel, or attempt to cancel, any existing surety bond.