Peabody hikes consent fee in solicitation to amend 4.75% convertibles

By Susanna Moon

Chicago, June 20 – Peabody Energy Corp. amended its consent solicitation for its 4.75% convertible junior subordinated debentures due 2066, offering more incentives for holders to participate in the offer.

Under the amended terms, the company boosted the consent fee to $15.00 per $1,000 principal amount and agreed to scrap its right to defer interest, according to an 8-K filing with the Securities and Exchange Commission.

The consent fee was increased from $2.50 per $1,000 principal amount.

In addition, the company is seeking to amend the notes indenture by eliminating provisions for the optional deferral of interest, which allow the company to defer interest payments on the convertibles as long as there is no mandatory trigger event.

Peabody originally said it was seeking to take out note provisions relating to mandatory deferral of interest that

• Require that the company defer interest payments on the convertibles under circumstances unless it obtains funds for those payments through the sale of qualifying warrants or qualifying preferred stock;

• Require that the company obtain the necessary funds through such a sale; and

• Prohibit the company from making distributions, including dividends, under its capital stock during any mandatory extension period and until the company has paid all accrued interest on the convertibles.

Peabody said it must obtain consents from holders of a majority of the outstanding convertibles, excluding those owned by Peabody or any of its affiliates, in order to amend the notes.

The solicitation will end at 5 p.m. ET on June 25, extended from June 17 and, before that, June 10. It began on May 28.

The solicitation is conditioned on the company securing the needed consents to adopt the proposed amendments.

Morgan Stanley & Co. LLC (855 483-0952) is the solicitation agent. Global Bondholder Services Corp. (212 430-3774 collect or 866 924-2200) is the tabulation and information agent.

If the proposed amendments are adopted, the company said it would benefit from greater financial and operational flexibility and increased ease of administration.

Peabody is a St. Louis-based coal producer.

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