By Kenneth Lim
Boston, Dec. 14 - Peabody Energy Corp. on Thursday priced an upsized $675 million of 60-year convertible junior subordinated debentures at the rich end of revised talk, at a coupon of 4.75% and an initial conversion premium of 40%.
The convertibles were offered at par. Price talk was revised to a coupon of 4.75% to 5% and an initial conversion premium of 40%, from the original guidance for a coupon between 4.5% to 5% and an initial conversion premium of 40% to 45%.
The size of the deal was originally $500 million. The over-allotment option remains at a further $75 million.
Morgan Stanley, Lehman Brothers and Citigroup were the bookrunners of the registered off-the-shelf offering.
The convertibles will have a scheduled maturity of 35 years, at which time Peabody must redeem the debentures with similar equity-credit securities. Failure to do so will be a breach of covenant, but not an event of default.
Peabody may defer coupon payments for up to 10 years. After five years of deferral or if a mandatory trigger event occurs, Peabody must fund coupons by selling warrants or preferred stock.
The debentures will be non-callable for the first five years. There will be a soft-call hurdle at 130% of the conversion price through year 25. There are no puts.
The debentures may be converted before Dec. 15, 2036 subject to a contingent conversion hurdle at 140% of the conversion price.
There will be dividend and takeover protection.
There will be a net-share settlement feature.
Peabody, a St. Louis, Mo.-based coal company, said it will use the proceeds of the deal to repay outstanding revolving and term debts, which were used to help pay for its recent acquisition of Excel Coal Ltd.
| Issuer: | Peabody Energy Corp.
|
| Issue: | Convertible junior subordinated debentures
|
| Bookrunner: | Morgan Stanley, Lehman Brothers and Citigroup
|
| Amount: | $675 million
|
| Greenshoe: | $75 million
|
| Scheduled maturity: | Dec. 15, 2041, on which issuer must attempt to pay holders principal and accrued and unpaid interest, by selling securities
|
| Maturity: | Dec. 15, 2066, on which issuer must pay any unpaid principal and interest
|
| Coupon: | 4.75%
|
| Price: | Par
|
| Yield: | 4.75%
|
| Conversion premium: | 40%
|
| Conversion price: | $61.95
|
| Conversion ratio: | 16.1421
|
| Contingent conversion: | 140%
|
| Net-share settlement option: | Yes
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable before Dec. 20, 2011; callable subject to 130% hurdle from Dec. 20, 2011 to Dec. 19, 2036
|
| Puts: | None
|
| Price talk: | 4.75%-5%, up 40%
|
| Pricing date: | Dec. 14 after the close
|
| Settlement date: | Dec. 20
|
| Distribution: | Registered
|
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