JWCA advises Peabody Energy Corporation on its $250 million convertible and capped call transaction to refinance its outstanding 2028 convertible notes

May 2026 | read press release

Transaction Background

Peabody Energy Corporation (“BTU” or the “Company”) successfully raised $250 million (inclusive of greenshoe) in the convertible market at highly attractive terms (0.50% coupon and 32.5% conversion premium). BTU concurrently repurchased ~$241mm (~75%) of its outstanding 2028 convertible notes with proceeds from the convertible offering and cash from the balance sheet

BTU’s objectives included:

  • Refinance a majority of the outstanding 2028 convertible notes into lower cost convertible debt, manage leverage by issuing smaller notional amount

  • Opportunistically take advantage of recent convertible market strength

  • Mitigate future equity dilution by purchasing a capped call with +75% upper strike price

JWCA provided extensive analysis on deal structuring and related items, including:

  • Refinancing roadmap, redemption vs repurchase negotiation tactics & analysis

  • Convertible and derivative overlay structuring, accounting analysis and tax implications, and syndicate structure and precedent data

  • Analysis of pricing mechanisms (VWAP vs. Close)

  • Convertible and capped call documentation to ensure maximum value and future efficiency/flexibility for the Company

  • Execution timing & tactics, investor and shareholder messaging

JWCA designed and ran a capped call auction process to achieve competitive terms

JWCA provided advice, support and analysis throughout the execution process

The offering was conducted with a 1-day wall cross before flipping to 1-day marketed format

Results

BTU's convertible transaction was very well received by investors:

  • The transaction was multiple times oversubscribed, reflecting strong investor interest and demand in the Company’s convertible bond offering

  • The confidential wall cross book-build resulted in the offering being fully covered before going into the day of public marketing, enabling the Company to achieve best terms

  • The 0.50% coupon represented the low end of the marketed coupon range

  • The 32.5% conversion premium represented the high end of the marketed conversion premium range

Capped call documentation and auction process produced meaningful savings for BTU, driving economics in the Company's favor

Due to the 2028 convertible’s trading proximity close to the redemption price, the Company was able to successfully repurchase ~$241mm (~75%) of the 2028 convertible notes from investors at a minimal premium to the current parity and make-whole value, resulting in significant savings compared to the market price