News Column

Peabody reaches agreement with debt holders

June 26, 2014

By Jacob Barker, St. Louis Post-Dispatch

June 26--Peabody Energy Corp. has reached an agreement with bondholders that will let it avoid issuing new shares or warrants to pay interest on some of its debt.

While the company has ample cash to make interest payments, the bonds issued in 2006 contained a special covenant keeping it from using cash if its leverage increases beyond a certain point. Bloomberg reported last month the St. Louis coal miner was nearing those leverage thresholds on the $732.5 million in debt.

The covenants also would have restricted Peabody's ability to pay dividends.

In May, Peabody asked holders of the 4.75 percent notes due in 2066 to waive the requirements, offering bondholders $2.50 per $1,000 of the notes' principal to do so.

On Friday, Peabody sweetened the terms, offering $15 per $1,000 of principal to the owners of the debt. If the bondholders hadn't agreed, Peabody would have been forced to potentially issue preferred shares or warrants to make interest payments, diluting existing stockholders.


Bloomberg News contributed to this report.


Jacob Barker is a business reporter at the Post-Dispatch. Follow him on Twitter @jacobbarker and the Business section @postdispatchbiz.


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Source: St. Louis Post-Dispatch (MO)

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