Peabody Proposes $225M Convertible Notes Due 2031 with $25M Upsize Option
BTU•Peabody plans a $225 million convertible senior notes offering due June 1, 2031, with a 13-day option for an additional $25 million, accruing interest and convertible into cash, stock or both. Proceeds will fund capped calls and repurchase of its 3.25% notes due 2028, potentially affecting share supply.
1. Offering Details
Peabody intends to privately offer $225 million aggregate principal amount of convertible senior notes due June 1, 2031, with an up to $25 million option for initial purchasers exercisable within 13 days of issuance. The notes will accrue interest payable semi-annually and rank as senior unsecured obligations.
2. Conversion and Redemption Terms
Noteholders may convert in specified periods, with Peabody settling conversions in cash, common stock or both. The company cannot redeem the notes before June 5, 2029, except for cleanup redemptions, and may redeem for cash if its stock trades above 130% of the conversion price, or after outstanding notes fall below 15%.
3. Use of Proceeds and Hedging Impact
Net proceeds are earmarked to fund capped call transactions designed to mitigate dilution and to repurchase a portion of its 3.25% Convertible Senior Notes due 2028. Hedged holders of the 2028 notes are expected to unwind equity positions, potentially boosting common stock trading volumes and influencing market price.
