Peabody Energy Corporation
) has extended exchange offers for its two series of senior
notes, totaling $2,858.4 million in aggregate principal amount.
Under this transaction, the company will offer to exchange
$1,518.8 million aggregate principal amount of 6.00% senior notes
due in 2018 and $1,339.6 million aggregate principal amount of
6.25% senior notes due in 2021. These offerings will close on
October 16, 2012.
As per the recommendation, Peabody can be tendered to the
exchange agent, U.S. Bank National Association, by the holders
for $1,515.5 million in aggregate principal amount or 99.78% of
outstanding unregistered 2018 senior notes of $1,518.8 million
and $1,338.6 million in aggregate principal amount or 99.93% of
outstanding unregistered 2021 senior notes of $1,339.6 million.
This present senior note issuance is the extended part of an
offering made by Peabody on November 7, 2011. The company
exercised public offering of two series of senior notes
aggregating $3.1 billion - $1.6 billion of 6% senior notes due in
2018 and $1.5 billion of 6.25% senior notes due in 2021.
Later, the company repurchased $81.2 million aggregate principal
amount of 6.00% senior notes due in 2018 and $160.4 million
aggregate principal amount of 6.25% senior notes due in 2021.
Currently, Peabody has $1,518.8 million aggregate principal
amount of 2018 outstanding senior notes and $1,339.6 million
aggregate principal amount of 2021 outstanding senior notes.
The company utilized a portion of the proceeds from its earlier
issuance of senior notes offering to fund the Macarthur Coal
acquisition and related fees and expenses. The remaining part was
used to repay a portion or all of any borrowings associated with
the acquisition or for general corporate purposes.
It is evident from last few offerings that Peabody issues senior
notes and bonds from time to time to accumulate funds for
repaying its existing debts and for its organic as well as
inorganic expansion projects. As of June 30, 2012, the company's
long-term debt was $6.27 billion compared with $6.56 billion as
of December 31, 2011. The debt level dipped as the company
repurchased bonds worth $240 million during second-quarter 2012.
The company is expected to release its third-quarter 2012 results
on October 22, 2012. The Zacks Consensus Estimates for
third-quarter 2012 and full-year 2012 are currently pegged at 34
cents and $1.78 per share, respectively.
We believe that slow recovery of the U.S. economy and the lower
gas prices are challenging the coal demand in the domestic
market. In the international arena, coal demand was negatively
impacted due to the planned production slow down in the
manufacturing sector and lower electricity generation. These
factors primarily tempted Peabody to slash its 2012 capital
expenditure budget by $200 million to $1.0 billion.
Peabody Energy Corporation currently has short-term Zacks #5
Rank (Strong Sell rating).
PEABODY ENERGY (BTU): Free Stock Analysis
CONSOL ENERGY (CNX): Free Stock Analysis
To read this article on Zacks.com click here.
St. Louis, Missouri-based Peabody Energy Corporation is the
world's largest private sector coal mining company and a global
leader in clean coal solutions. The company owns majority
interests in 29 mines in the U.S. and Australia. With a market
capitalization of $7.20 billion, Peabody has 8,300 full time
employees. The company's closest peer is
CONSOL Energy Inc.