Peabody Energy closes transactions with lenders, bondholders, surety providers

Peabody Energy Corp. announced on Jan. 29 that it completed a series of transactions that provide the company with debt maturity extensions and covenant relief, and finalize a dispute with surety providers.

Among the transactions, Peabody settled an exchange offer made to holders of its 6% senior secured notes due March 2022. The company said $398.7 million principal amount of the 6% notes were exchanged into $193.9 million of new 10% senior secured "co-issuer" notes due 2024, $195.1 million in new 8.5% senior secured notes due 2024, and $13.4 million of cash.

Peabody previously announced having received sufficient consents to eliminate "substantially all" of the 6% senior secured notes' restrictive covenants, certain events of default and certain other provisions and to release the collateral securing the notes. On Jan. 8 the company entered into a supplemental indenture containing the amendments.

Peabody also said it restructured revolving loans under its existing credit agreement, exchanging $540 million of revolving loan commitments for $206 million of a new term loan and $324 million of a new letter of credit facility. The company also paid down $10 million of the revolver.

Peabody also finalized a global surety agreement, resolving outstanding collateral request issues from surety providers. Peabody posted a $75 million letter of credit in 2020's fourth quarter and will post a further $25 million in collateral each year from 2021 through 2024, "plus other amounts in accordance with the surety agreement." In return, surety providers agreed not to demand additional collateral for existing bonds, draw on letters of credit posted for the benefit of themselves, or cancel any existing surety bonds.

Peabody President and CEO Glenn Kellow noted that the transactions push out the majority of the company's nearest term funded debt maturities to the end of 2024. The CEO added that "these steps provide us with the additional flexibility needed to continue to pursue operational improvements."

Peabody is the world's largest private sector coal company by volume, with most of its operations in the U.S. and the remainder in Australia.