Peabody Reaches Support Agreement With Certain Creditors On Financial Covenant Relief, Debt Maturity Extension And Notes Exchange Offer

Peabody (NYSE: BTU) has entered into a transaction support agreement with 100 percent of its revolving lenders and letter of credit issuers and approximately 65 percent of its 6.000% senior secured notes due 2022 that contemplates a comprehensive financing solution to extend certain of Peabody’s debt maturities and grant financial covenant relief, while maintaining sufficient operating liquidity and financial flexibility.

“Today’s announcement is significant for the company as well as its many stakeholders,” said Peabody President and Chief Executive Officer Glenn Kellow. “Closing of the exchange transaction will provide Peabody with the flexibility needed to continue to pursue operational improvements across our operations as well as capture potential seaborne met and thermal market improvements.”

Pursuant to the transaction support agreement, the creditors have agreed, subject to the terms thereof, to support the implementation of an offer to exchange the 2022 senior secured notes for new 2024 notes to be issued by Peabody and certain subsidiaries. The company’s revolving credit lenders have also agreed to convert the existing revolving credit facility into new term loans and a letter of credit facility due in December 2024. The transaction support agreement follows the previously announced surety bond collateral standstill agreement reached in November 2020, which remains contingent on Peabody closing on the recently launched proposed exchange transactions.

“We are pleased to have reached a support agreement with a substantial number of our creditors that lays the financial foundation for future success and value creation,” said Executive Vice President and Chief Financial Officer Mark Spurbeck. “This agreement would extend our nearest debt maturity to December 2024, eliminate the restrictive net leverage covenant from our credit agreement and along with the surety collateral standstill, provide a greater line of sight into future liquidity requirements.”

Following a successful closing of the exchange offer, Peabody’s pro forma capital structure would include $1.52 billion of funded debt and a $324 million letter of credit facility.

Peabody will be filing a Form 8-K with the Securities and Exchange Commission (SEC) regarding the transaction support agreement and related matters. The Form 8-K is currently available on PeabodyEnergy.com under “Investor Relations – Presentations” and will be available on the SEC website on Dec. 28, 2020. The related investor presentation will also be furnished as part of the Form 8-K filing and is currently available on PeabodyEnergy.com under “Investor Relations – Presentations.” Any exchange transaction questions should be directed to Lazard or Jones Day.