PEABODY ENERGY CORP 8-K

What Happened

• Peabody Energy Corporation announced the completion (June 2, 2026) of a private offering of $250 million aggregate principal amount of 0.50% Convertible Senior Notes due June 1, 2031 (the “Notes”). The Notes are senior unsecured obligations and bear interest semi‑annually beginning December 1, 2026. Wilmington Trust, National Association is the trustee under the Indenture dated June 2, 2026.
• Net proceeds were approximately $243.3 million. Peabody expects to use about $16.7 million of the proceeds to fund capped call transactions and, together with available cash, to repurchase approximately $241.2 million principal amount of its outstanding 3.250% Convertible Senior Notes due 2028 for a total cash purchase price of about $388.8 million.

Key Details

• Total issued: $250.0M convertible notes (0.50% coupon) maturing June 1, 2031; interest paid semi‑annually.
• Net proceeds: ~$243.3M; ~$16.7M allocated to capped calls; planned repurchase of ~ $241.2M principal of 2028 notes for ~$388.8M.
• Conversion terms: initial conversion rate 26.0970 shares per $1,000 principal (≈ $38.32 per share), conversion available only upon specified triggers; company may settle in cash, stock, or both.
• Capped call hedges entered with initial cap price $50.6095 per share (approx. 75% premium to the May 28, 2026 VWAP); capped calls expire beginning April 17, 2030.

Why It Matters

• The transaction raises liquidity and extends debt maturity to 2031 while carrying a very low coupon (0.50%), reducing near‑term interest cash outflow versus higher‑coupon debt.
• The planned repurchase of the 2028 convertible notes reduces potential near‑term dilution and alters the company’s convertible exposure, while capped calls are intended to limit dilution if conversions occur (up to the cap price).
• Investors should note conversion and redemption mechanics (price triggers, cleanup and fundamental‑change repurchase rights) and the potential for dilution if the stock rises above conversion thresholds, although the initial conversion price includes a ~32.5% premium to the May 28, 2026 VWAP.