Peabody to exchange $398.69 million 2022 notes for new 2024 notes, cash

By Taylor Fox

New York, Jan. 26 – Peabody Energy Corp. gave the final results on its offer to exchange any and all of it outstanding $459 million of 6% senior secured notes due March 31, 2022 (Cusips: 70457LAA2, U7049LAA6) for a combination of cash and new 10% and 8½% senior secured notes due Dec. 31, 2024, according to a news release.

As of the 11:59 p.m. ET Jan. 25 expiration, $398.69 million, or 86.86%, of the existing notes were tendered and accepted for exchange.

As previously reported, as of the extended early tender time of 5 p.m. ET on Jan. 15, noteholders had tendered $397.5 million, or 86.6%, of the existing notes in the exchange offer and related consent solicitation.

As of the original early deadline, noteholders had tendered $391.2 million, or about 85%, of the outstanding notes.

Exchange offer

The new 10% notes will be issued by indirect Peabody subsidiaries PIC AU Holdings LLC and PIC AU Holdings Corp., while the new 8½% notes will be issued by Peabody.

Peabody said it expects that each $1,000 of existing 6% notes tendered will be exchanged into an amount of new 8½% Peabody notes that, together with new 10% co-issuer notes received in exchange, the pro rata payment and the early tender premium, will amount to $1,010 aggregate consideration per $1,000 of principal amount of existing notes tendered.

Given the participation level of 86.86%, holders will receive for each $1,000 of existing notes tendered, $486.59 principal amount of new 10% notes, $489.78 principal amount of new 8½% notes and a pro rata share of a $9.42 million cash payment equal to $23.63, as well as the early tender premium of $10.00 in cash.

The offer was conditioned upon a minimum participation threshold of 95%. This has been waived based on the approval of a majority of the revolving lenders and 66 2/3% of the consenting noteholders. The company required that at least 85% of noteholders tender their notes by the expiration date, and they have.

Settlement is expected to occur Jan. 29.

Consents

Simultaneously with the exchange offer, Peabody solicited consents to amend the indenture of the existing notes to eliminate substantially all of the restrictive covenants and some events of default and to release the collateral securing the notes. The collateral is 100% equity interest in a subsidiary that owns the Australian Wilpinjong coal mining complex.

As of the withdrawal deadline at 5 p.m. ET on Jan. 8, Peabody received consents sufficient to approve the amendments.

On Jan. 8, the company entered into a supplemental indenture containing the amendments, which will not become operative until settlement of the exchange offer.

The indenture amendments required consents from holders representing a majority of the notes, and the release of collateral required consents from holders representing at least 66 2/3% of the notes.

Redemption

The company has also, in connection with the exchange offer and within 15 days of the settlement date, agreed to purchase up to $22.5 million total accreted value of the new 8½% Peabody notes at a purchase price equal to 80% of the accreted value of the new notes, plus interest, if any, to the applicable purchase date.

Global Bondholder Services Corp. (212 430-3774, 866 470-4500; https://gbsc-usa.com/eligibility/peabody) is the information agent and exchange agent for the exchange and consent solicitation which began on Dec. 24.

Peabody Energy is a St. Louis-based coal producer.

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