Peabody Prices $225M Convertible Notes at 32.5% Premium to Repurchase 2028 Debt
BTU•Peabody priced a $225 million 0.50% convertible senior notes issue due 2031 with a 32.5% premium conversion price of $38.32, plus a $25 million option. Net proceeds of approximately $218.9 million (or $243.3 million fully subscribed) will fund capped calls and repurchase $241.2 million of 2028 notes.
1. Offering Details
Peabody has issued $225 million aggregate principal of 0.50% convertible senior notes due June 1, 2031, with an option to sell up to an additional $25 million. Interest will be paid semi-annually beginning December 1, 2026, and the notes are senior unsecured obligations.
2. Conversion Terms
The initial conversion rate is 26.0970 shares per $1,000 principal, equating to a conversion price of $38.32 per share, a 32.5% premium over the prior day’s VWAP. Conversions are permitted upon specified events before December 1, 2030, and at holders’ election thereafter up to two days before maturity.
3. Use of Proceeds
Net proceeds of approximately $218.9 million (or $243.3 million with full exercise) will finance capped call transactions and, alongside cash on hand, repurchase $241.2 million of its 3.250% 2028 convertible notes for about $388.8 million. This aims to optimize capital structure and manage future dilution.
4. Hedged Holder Market Impact
Holders of the 2028 notes who hedged equity risk are expected to buy shares or adjust derivatives when unwinding their positions, potentially increasing the stock price. Such activity may raise the effective conversion price of the new notes and influence market trading dynamics.
