Peabody Energy to launch $1.2 billion loan on Tuesday

By Sara Rosenberg

New York, Feb. 27 - Peabody Energy is scheduled to launch a new $1.2 billion credit facility on Tuesday, according to market sources. Lehman Brothers, Wachovia and FleetBoston are the lead banks on the deal.

The loan consists of a $600 million revolver and a $600 million term loan, sources said.

Proceeds will be used to help fund Peabody's tender offer to purchase $317.098 million 8 7/8% senior notes due 2008 and $392.219 million 9 5/8% senior subordinated notes due 2008, according to a news release. The tender offer is conditioned on the consummation of this new credit facility and the issuance of $500 million of other senior debt.

Peabody is a St. Louis coal company.

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