Peabody Energy talks $250 million six-year convertible notes to yield 3%-3.5%, up 30%-35%

By Abigail W. Adams

Portland, Me., Feb. 23 – Peabody Energy Corp. plans to price $250 million of six-year convertible notes after the market close on Thursday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 30% to 35%, according to a market source.

Goldman Sachs & Co. LLC and Jefferies LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $37.5 million.

The notes are non-callable until March 1, 2025 when they become callable for cash subject to a 130% hurdle.

They are putable upon a fundamental change. There is dividend protection.

The notes will be settled in cash, shares or a combination of both at the company’s option.

Proceeds will be used to redeem the full outstanding $62.618 million of the company’s 8.5% senior secured notes due 2024 and a portion of its 6.375% senior secured notes due 2025.

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

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