BTU PEABODY ENERGY CORP
Price Chart
Executive Summary
Peabody priced a $225M convertible senior notes offering due 2031 (0.50% coupon), with an underwriter option for an additional $25M. Net proceeds (~$218.9M) will fund ~$15M in capped call transactions and, together with available cash, repurchase ~$241.2M of outstanding 2028 Notes for ~$388.8M. The transaction refinances near-term convertible debt with longer-dated, lower-coupon debt while capping dilution via capped calls.
Actionable Insight
The refinancing extends debt maturity by 3 years and cuts annual interest cost by ~$6.7M, a credit-positive. However, the $388.8M cash outlay for the 2028 note repurchase will meaningfully reduce cash reserves. Monitor the company's next quarterly cash position and leverage ratio. The capped call structure limits dilution risk below $50.61, but the conversion premium at 32.5% suggests management expects limited near-term upside.
Key Facts
- Priced $225M aggregate principal amount of 0.50% convertible senior notes due 2031
- Initial purchasers granted 13-day option to purchase up to an additional $25M of notes
- Initial conversion price ~$38.32 per share, a 32.5% premium over the $28.9197 VWAP on pricing date
- Net proceeds estimated at ~$218.9M (~$243.3M if greenshoe fully exercised)
- ~$15M of net proceeds used to fund capped call transactions (cap price $50.6095, 75% premium over VWAP)
- Together with available cash, repurchasing ~$241.2M of outstanding 3.250% Convertible Senior Notes due 2028 for ~$388.8M
- Notes are senior unsecured obligations; interest payable semi-annually starting Dec 1, 2026
- Peabody cannot redeem notes before June 5, 2029, except for a cleanup redemption if <15% remains outstanding
- Noteholders may require repurchase at 100% of principal plus accrued interest upon a fundamental change
- Capped call transactions reduce potential dilution upon conversion prior to May 30, 2030, subject to cap
Financial Impact
Refinancing $241.2M of 3.25% 2028 notes with $225M of 0.50% 2031 notes; net debt reduction of ~$16.2M after accounting for ~$15M capped call cost and ~$388.8M cash outlay for repurchase; annual interest savings of ~$6.7M (from ~$7.8M to ~$1.1M).
Risk Factors
- Cash outlay of ~$388.8M for 2028 note repurchase will reduce liquidity
- Potential dilution if stock price exceeds $38.32 conversion price; capped calls limit dilution only up to $50.61
- Hedging activity by option counterparties and 2028 note holders could create short-term stock price volatility
- Convertible notes are senior unsecured obligations, increasing leverage
Market Snapshot
Documents Analyzed
This report is based on 5 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001193125-26-245937 |
| Document: d154082dex991.htm | 0001193125-26-245937 |
| Document: 0001193125-26-245937-index-headers.html | 0001193125-26-245937 |
| Document: 0001193125-26-245937-index.html | 0001193125-26-245937 |
| Document: 0001193125-26-245937.txt | 0001193125-26-245937 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
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Jun 15, 2026
5d ago
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8-K
| $26.03 $25.47 | ▼ −2.15% | ▼ −1.56% | $24.80 (−4.73%) |
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Jun 2, 2026
18d ago
|
8-K
| $29.62 $30.11 | ▲ +1.65% | ▲ +2.35% | $24.80 (−16.27%) |
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May 29, 2026
23d ago
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8-K
| $27.05 $29.06 | ▲ +7.43% | ▲ +7.17% | $24.80 (−8.32%) |
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May 28, 2026
23d ago
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8-K
| $29.10 $27.05 | ▼ −7.04% | ▼ −7.28% | $24.80 (−14.78%) |
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May 5, 2026
6w ago
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8-K
| $25.00 $24.96 | ▲ +0.16% | ▲ +1.54% | $24.80 (+0.80%) |
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Apr 7, 2026
10w ago
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DEFA14A
| $30.18 $27.71 | ▼ −8.18% | ▼ −8.76% | $24.80 (−17.83%) |
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Mar 26, 2026
12w ago
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DEFA14A
| $39.50 $35.68 | ▼ −9.67% | ▼ −9.31% | $24.80 (−37.22%) |
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